New USA Ambassador to Zambia will remind President Hichilema that despite free market access, Zambia exports almost nothing to his country.

By Edward Chisanga

The US provides free export market for Zambia

Let me begin by welcoming you, Mr. Ambassador, to our lovely country. Mr. Ambassador, in 2000, US President Clinton created the African Growth and Opportunity Act (AGOA), preferential trade agreement with almost all African countries, except Arab ones, to provide them an opportunity to export to that country free of charge, almost all products. In particular, the third-country fabric rule allows AGOA beneficiary countries to use yarns and fabrics from any country in the manufacturing of their textiles and clothing for export to the US at zero-duty.

Zambia is very vocal in asking for extension of AGOA

Mr. Ambassador, over two decades have passed. AGOA has since been extended many times even when, according to the US, it should have a limited life span. In fact, each time it’s nearing an end, African leaders speak big asking for extension. Zambia is not exempted. It has been vocal too. Then Commerce, Trade and Industry Minister, Bob Sichinga said, “Extension of AGOA would allow Zambian entrepreneurs to benefit greatly from it in terms of capacity building.”

At another forum, Zambia’s Ministry of Commerce, Trade and Industry-Permanent Secretary Stephen Mwansa said, “The provision is imperative for survival of the textile and apparel industry of Africa as a whole, as it leads to generation of a lot many jobs in the continent.” At another, the Ambassador of Mauritius and Zambia said, “The passage of legislation S.2007 and H.R. 2493 would enable the US to continue to receive high-quality textiles and apparels from Africa at competitive prices.”

But has Zambia taken advantage of the free market access?

Mr. Ambassador, I earnestly implore you to hold a colloquy with our President Hichilema to understand why Zambia is literally not participating in trade with your country, despite the many public pronouncements of interest referred to earlier by our leaders. Of course, he was not in leadership then, but if he’s going to market our country to you for more trade and investment, the basis for our President is to understand where the trade partnership between the US and Zambia is coming from and where it is. For me, a statistics expert, like others who understand, it’s very disheartening to note that Zambia is not among the top twenty African countries exporting to your country.

Mr. Ambassador, as Table 1 below shows, Zambia ranks almost number thirty, and with inferior export values in absolute terms of only $55 million in 2021. While some African countries are seriously using AGOA, our country is not. It means when Ministry of Commerce, Trade and Industry officials, asking for extension of AGOA, they were not speaking for Zambia but for these countries you see on top of the Table below. Mr. Sichinga said, “Extension of AGOA would allow Zambian entrepreneurs to benefit greatly.” But we Zambians have not seen that benefit because Zambia’s business sector is not exporting to your country.

Table 1: Top African countries exporting all products to USA in $ Millions

Source: Unctadstat

Mr. Ambassador, let me now share with you Zambia’s exports of all products to your country over the last two decades. You will note that Zambia has only moderately increased exports since AGOA was introduced as Figure 1 below shows. At one time, exports reached $100 million, only to drop to almost half later. Meanwhile, as expected Zambia has been importing more from your country than it has been exporting, leading to continuous trade deficits.

Why low level of exports to the US?

Mr. Ambassador, it is because Zambia made a choice to diversify export markets, largely to China and Switzerland, two of its main importers of copper, the only major export product seen in Figure 2 below. As you can see, exports to China stand at about $2.8 billion and Switzerland about $3.8 billion. Zambia’s exports to your country shown in Figure 2 image is almost invisible to the naked eye because it is too low.

Main challenge for you Mr. Ambassador

Mr. Ambassador, I speak about only trade in which my expertise lies. But, as I’m sure you have already been informed, I wish to remind you that the new government of President Hichilema is obsessed, and correctly so, with transforming our economy into value addition. Mr. Ambassador, you will recall that one of the shortcomings of AGOA or your trade preferences is that they are not accompanied with support for value addition. Of course, a trade preference is what it is. But without capacity for value added, Zambia will never benefit from the scheme.

It then brings me to the question of foreign direct investment (FDI) as one way your country can help us in value addition. And, here, I wish to recall your country’s influence in the economic transformation of Viet Nam, which, for your information has overtaken Africa, including South Africa in exports of manufactured goods. UNCTAD, my former employer has publications that show the contribution of FDI, in part from your country to Viet Nam in its structural transformation. How the Viet Nam model can apply to Zambia, is something I personally would be interested in.

Finally, Mr. Ambassador, as a citizen of this country interested in making trade and FDI work for Zambia, I’m available if you need any colloquy and more information about advancing this colloquy. Again, welcome to Zambia and, highest considerations.