• Tue. Apr 23rd, 2024

ZLECAf, a way to liberalize trade potential in Burundi

ByWebmaster

Jan 23, 2023

BUJUMBURA January 23rd (ABP) – The Center for Development and Enterprises–Great Lakes (CDE Great Lakes) in partnership with the Initiative for African Trade and Prosperity (IATP), underlines, through a jointly conducted study, titled “Agreement of the African Continental Free Trade Area (ZLECAf) and its implication for the people of Burundi”, that Burundi has opportunities with the ZLECAf, but also challenges to overcome, to liberalize the potential of its trade.

The prosperity of a country is not possible without its openness to the outside world. All the countries that have achieved economic growth have done so by seizing the opportunities offered by the liberalization of regional and international markets. Given the place of Burundi in the rankings of the index of economic freedom or trade openness, it is not yet a good student in terms of trade openness despite integration into many economic communities.

One of those opportunities that Burundi should seize is the ZLECAf: “90% of goods will be exempt from customs duties, which should stimulate intracontinental trade, encourage foreign direct investment, and as a result, raise growth and reduce poverty in Burundi,” says Dr Franck Arnaud Ndorukwigira of CDE Great Lakes. According to the World Bank, by 2035, the ZLECAf will increase Africa’s GDP by USD 450 billion, raise the wages of skilled and unskilled workers by 10% and draw more than 30 million people from extreme poverty (defined as living on less than $1.90 a day), and over 68 million people to move out of moderate poverty (i.e., living on $1.90 to $5.50 per day).

 

ZLECAF, an opportunity for Burundi

Burundi signed the ZLECAf Agreement on July 2, 2018, in Nouakchott, Mauritania. In that process of trade opening at the continental level, the economist and professor at the University of Burundi, Salomon Nsabimana, points out that Burundi has made considerable progress: “the country ratified the ZLECAf agreement on June 17, 2021, and an autonomous national strategy for the implementation of the ZLECAf has been drawn up and validated”, he underlines.

For Professor Nsabimana, the implementation of ZLECAf will create for Burundi a growing external market for our exportable goods and services, without tariff and non-tariff barriers, with freedom of movement for investors. There will be a drop in the prices of finished products for the benefit of Burundian consumers, the development of regional value chains, access for producers to cheaper raw materials, foreign competition which will encourage the upgrading of Burundian companies to deal with the competition and a broadening of the job market.

 

Challenges to overcome

The stakes are high. According to Professor Salomon Nsabimana, there is a low ownership of the various trade policy texts by economic operators, thus hindering the implementation of ZLECAf. “It is not a simple agreement, but a strategic instrument for the development and integration of Africa, and therefore of Burundi in particular”, Professor Salomon says. In addition, the country notes an insufficiency and low quality of the exportable supply due to limited access to energy, an absence of industries and processing plants, an insufficiency of transport infrastructure and storage logistics and conservation of exportable products, a lack of specific export financing mechanism and a weak regulatory framework governing trade.

He has not forgotten the absence of an effective mechanism for producing useful strategic information for economic operators, a lack of knowledge of the advantages and opportunities to be drawn from the agreements concluded, low professionalism in terms of trade exacerbated by the tendency to work solo, low purchasing power, a trade balance deficit, and a low level of qualification of the available workforce.

Solution track

For Aimable Manirakiza, Executive Director of the CDE, ZLECAf is a solution to creating employment and opportunities for all in Burundi. To achieve this, Burundian investors must ensure that their production involves processing or sufficient added value. This implies for Burundi to boost its production, multiply the industrial and energy infrastructure to increase its exports, without forgetting to create an environment favorable to national and foreign investments through small and medium-sized enterprises. “It is in this way that Burundi could develop its competitiveness and establish itself as a serious competitor on the African market, in order to benefit from the ZLECAf benefits”, he adds.

Beyond those challenges, large-scale dissemination and popularization efforts of ZLECAf content are more than a necessity, so that all stakeholders are informed of ZLECAf expectations, and make effective ownership of it. This national ownership of the ZLECAf will be of paramount importance to boost efforts to improve trade performance in Burundi, and to take full advantage of a trade openness on a continental basis, which will boost prosperity and economic growth for the Burundi.