International trade: Zimbabwe must assert its rights

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BY Joseph Brian Madhimba
INTERNATIONAL trade is a useful weapon in the arsenal of the fight against poverty.

Currently, international trade is dominated by the European Union (EU), United States, Brics countries, Japan and Asian Tigers

Now is the time for Zimbabwe to claim its place in world trade. Our vast resources serve us well.

International trade is regulated by the World Trade Organization (WTO). Its predecessor, the General Agreement on Tariffs and Trade, was formed after World War II to eliminate tariff and non-tariff barriers on
Trade.

When the WTO was created in 1995, it expanded the scope of international trade to include services such as banking and insurance. In addition to ensuring free trade, the WTO also rules on trade disputes.

Zimbabwe should take advantage of the African Continental Free Trade Area (AfCFTA) and WTO provisions to increase trade with African countries and the rest of the world.

In its desire to trade more, Zimbabwe can take inspiration from the Japanese commercial model.

First and foremost, Japan has benefited from the correlation between foreign direct investment (FDI) and trade.

Japanese multinationals have accelerated the internationalization of manufacturing systems by taking advantage of cheaper means of transport and technology to outsource part of their production. This has led to an increase in exports of manufactured goods and services, ie an expansion of international trade.

The increase in FDI by Japanese multinationals has radically changed the structure of international trade. For example, outward FDI can substitute for exports, with parent companies setting up subsidiaries to meet local demand or to circumvent trade restrictions in the host country.

Another reason for outward FDI is to take advantage of favorable conditions in host countries, such as cheaper labor or lower taxes.

Japan has a thriving manufacturing sector. For example, Japanese automakers, Nissan, Toyota and Honda, dominate the global market.

Japan also succeeded in manufacturing and exporting televisions, radios and computers.

Japan’s competitive advantage lies in its low import tariffs compared to other industrialized countries. This makes imported raw materials relatively cheaper. Japanese companies are therefore competitive in world markets because they can export high-quality goods at low prices.
prices.

Zimbabwe should learn from Japan. We need to develop our manufacturing sector.

Our agriculture-based economy produces cooking oil, flour, peanut butter, dairy products, sugar, cigarettes, home textiles, and more.

Revenues from minerals, which will sooner or later run out, should be invested in the manufacturing sector.

In developing a robust export sector, the government of Zimbabwe should integrate small businesses. These should be supported financially and encouraged to produce more for export.

Some small businesses in Zimbabwe produce peanut butter, cooking oil and soap using simple technologies. Advanced technology should be imported to enable them to increase their production.

While importing some foreign skills to boost manufacturing, we also need to support locals with potential. Zimbabweans are talented and can learn quickly. My late uncle, Cuthbert Tafira, would brag about it”Handina kufunda, asi ndinogadzira mabhazi.» : This translates to « I am not educated, but I do buses ». His education level was the former Standard Four, but he was a quality assurance manager at Willovale Motor Industries. Such is the talent of Zimbabweans.

Establish more Indigenous banks

To support Zimbabwe’s entry into foreign markets, I suggest the creation of more local banks. A thriving banking sector will contribute immensely to Zimbabwe’s increased penetration in foreign markets.

Local banks will finance Zimbabwean companies wishing to enter global markets through acquisitions, equity investments and joint ventures.

Moreover, such a dynamic banking sector will be an asset for inward FDI.

Finally, Zimbabwe needs to do more international trade. The benefits will be more foreign exchange and jobs as well as poverty reduction.

  • Joseph Brian Madhimba (PhD) is a business and financial market expert. It has a university offering development-oriented degrees in business, economics, entrepreneurship, marketing and logistics, and supply chain management.

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