Zimbabwe’s Trade Opportunities with the EU: Challenges and Prospects

Economy John Brightwater September 20, 2024

Zimbabwe’s Trade Opportunities with the EU: Challenges and Prospects

Summary
Zimbabwe struggles to fully capitalize on duty-free export opportunities within the European Union, with only 200 firms utilizing the Economic Partnership Agreement (EPA). Trade between Zimbabwe and the EU has the potential to grow to $1 billion, but current exports remain limited despite a positive trade balance in 2023. EU Ambassador Jobst von Kirchmann emphasizes the need for more value-added products from local companies to attract European investments. The EU is also aiding in Zimbabwe’s debt management efforts.

Zimbabwe is currently facing challenges in fully utilizing its export capabilities to the European Union (EU) despite the advantages presented by a duty-free agreement. The EU represents a significant market with a gross domestic product (GDP) of $19 trillion, which starkly contrasts with the $3.4 trillion GDP of the African Continental Free Trade Area. Recently, EU Ambassador to Zimbabwe, Jobst von Kirchmann, indicated a positive outlook for trade, estimating that transactions between Harare and Brussels could grow to $1 billion in the next few years, a rise from the current approximately $750 million. However, only 200 Zimbabwean enterprises are availing themselves of the Economic Partnership Agreement (EPA) that has been in place for a decade. In 2023, trade statistics reflected €658 million worth of exchanges between Zimbabwe and the EU, with Zimbabwe exporting goods valued at €346 million while importing €312 million, leaving the nation with a positive trade balance of €34 million. The cornerstone of Zimbabwe’s exports consists of agricultural commodities such as sugar, blueberries, and oranges, in addition to mineral products. However, the restricted number of exporters reveals a significant disparity in available trade opportunities. Ambassador von Kirchmann emphasized the EPA’s key role: “The EPA, in place since 2012, provides Zimbabwe with duty-free and quota-free access to all 27 EU member states. However, only about 200 Zimbabwean companies are currently registered to export to the EU, leaving considerable room for growth.” To advance trade relations, he advocates for local companies to prioritize value-added products within agriculture and mining sectors, which could effectively draw more European investments into Zimbabwe. Furthermore, the EU is engaged in assisting Zimbabwe in addressing its debt issues, under the guidance of African Development Bank (AfDB) President Akinwumi Adesina. The ambassador co-chairs the governance track of this initiative, which is aimed at enhancing reforms pertaining to transparency and accountability. Zimbabwe is indebted to the European Investment Bank for $427 million, primarily due to arrears and penalties, complicating its financial landscape. While these issues are not part of direct bilateral discussions, the EIB is involved in broader creditor talks to mitigate this predicament. As Zimbabwe confronts its economic trials, maximizing the EU’s trade opportunities stands as an essential endeavor for fostering stronger trade ties and securing vital financial assistance.

Zimbabwe’s economic interactions with the European Union are framed by a duty-free agreement established under the Economic Partnership Agreement (EPA), which has been in effect since 2012. The EPA is designed to facilitate trade by granting Zimbabwe preferential access to EU markets, with the expectation that local businesses capitalize on these opportunities to enhance their export capacities. Despite these provisions, the engagement between Zimbabwean firms and the EU market remains limited, suggesting systemic challenges within Zimbabwe’s export sector. The EU’s financial commitment to Zimbabwe is also linked to the country’s ongoing debt obligations, which add a layer of complexity to trade negotiations and economic development efforts.

In conclusion, Zimbabwe has yet to fully harness the trade potentials offered by the European Union despite existing agreements that provide significant access to EU markets. The relatively low number of exporters engaging with the EPA highlights this gap, presenting an opportunity for growth through enhanced focus on value-added products. As the EU continues to support Zimbabwe in addressing its debt and fostering necessary economic reforms, effectively leveraging EU trade opportunities will be crucial for Zimbabwe’s economic recovery and overall development.

Original Source: bulawayo24.com