Fostering Equity and Accountability in the Trading System (FEATS) Patrick Chengo, Project Assistant CUTS Africa Resource Centre , Lusaka 8 April 2009
Explanation of Zambian trade policy
Trade policy process
Key government institutions
MCTI, other government institutions, private sector, CSOs
Inclusive Trade Policy Making (ITPM) index
2007: population of 11.922 million and nominal GDP of 11.271 billion US$
GDP per capita declined from US$ 461 in 1990 to US$ 310 in 2000, but increased to US$ 938 in 2006
From 1991 to 2006, the incidence of poverty has declined in Zambia, reaching 64% in 2006
During the same period, urban poverty increased from 15% to 33%.
In 2005, 64.3% of population lived below $1.25 US dollars per day, and 81.5% below $2.00 US dollars per day
Informal sector includes 81% of labor force in 2003
Services make up the bulk of GDP, amounting to 51.3% in 2006 and have increased considerably since 1990
Zambia’s balance of payments has been positive since 2005
Copper is the main export at 58.3% of total exports
Cobalt, also important, makes up 16%
Most significant imports: machinery and transport equipment (39.9%), mineral fuels, lubricants and related materials (15%), chemicals (14.8%) and manufactured goods (14.2%)
Trade Shares in regional agreements
2007, 13.7% and 23.2% of total exports to COMESA and SADC member countries respectively
2007, 9.0% and 57.0% of total imports from COMESA and SADC member countries respectively
Trends in Zambian Trade performance
little progress in export product and market diversification efforts
Zambian integration in global economy has increased
South Africa is the main import source (47.4% of total in 2007)
Major Export destinations: Switzerland(41.8%) South Africa (12%)
Country Share in Total Exports Switzerland 41.8% South Africa 12.0% Thailand 5.9% DRC 5.3% Egypt 5.0% Country Share in Total Imports South Africa 47.4% United Arab Emirates 6.3% China 6.0% India 4.1% UK 4.0%
Independence to the mid-1970s: state control characterized the economy,
Nationalization allowed for 80% state control of the economy through parastatals
Oil shocks of 1970s and the considerable drop in the price of cooper took a heavy toll on Zambia and its economic conditions declined
First Structural Adjustment Programme (SAP) in 1985, abandoned in 1987
1991, first multiparty elections held
period of liberalization: opening of trade, decentralization, and deregulation of the economy
IMF ranks Zambia as the most open trade regime in Sub-Saharan Southern African region
World Bank TTRI data shows increased openness of Zambian trade regime
TTRI rating for MFN applied tariffs increased over 2005-2007 to 2008 from 8.7 to 8.9
Overall TTRI rating declined over 2005-2007 to 2008 from 8.8 to 8.5
Consolidation of economic reforms in recent years has put an emphasis on poverty reduction
Last comprehensive trade policy in Zambia was adopted in 1994
Currently, trade policy is aimed at creating a competitive and productive economy driven by private sector initiatives, improving living standards for Zambians and alleviating poverty.
Committed to the multilateral trading system
Overall policy framework is provided by Vision 2030
Within the context of Vision 2030 and the Fifth National Development Plan, a strategic plan has been developed by the Ministry of Commerce, Trade and Industry.
This strategic plan (2006-2010) aims to promote the growth and development of commercial and industrial sectors
Zambian participation in IF processes
Participation has helped to include trade policy into overall development strategies of the country
DTIS findings have been incorporated into 5th national development plan, Private Sector Development Programme, and the strategic plan of MCTI to implement findings of DTIS
Zambia currently preparing a 5 yr. Implementaion plan for the EIF
National policy-making in Zambia is generally a preserve of the executive wing of the government through Cabinet decisions or pronouncements by the President:
Concerned ministry holds consultations with other relevant ministries and stakeholders (depending on the nature of the issue), and prepares the first draft of the policy/measure.
Circulated to all ministries (21 days to comment)
Revised draft is sent to the Ministry of Justice and Legal Affairs, which drafts a bill
Bill submitted for approval to the Legislation Committee of Cabinet, and subsequently to the full Cabinet
Published in the Government Gazette
Sent to the Parliament, which approves after three readings
Sent to the President for assent, after which the bill becomes an Act of Parliament.
Act usually comes into force as soon as it is published in the Gazette, unless a specific date is mentioned
Ministry of Commerce, Trade and Industry (MCTI) :
responsible for developing and implementing national policies for private sector development.
MCTI’s mission is “to facilitate and promote the growth, development and competitiveness of commercial, trade and industrial sectors in order to enhance socio-economic development”.
custodian of all trade policy issues in Zambia
Providing inputs on regional and international trade policies and implementation
Providing factual information
Presenting and defending Zambia’s position in international negotiations
Participating in relevant meetings and conferences
Hosting foreign missions
Consulting national stakeholders
Inviting other stakeholders to submit sector reports
Many government ministries and agencies deal with issues directly related to trade:
Policy guidance and decision making (e.g., Ministry of Finance and National Planning (MoFNP))
Interpret trade related statutes, laws and render legal opinion (Ministry of Justice and Legal Affairs)
Provide input and feedback (e.g., Ministry of Agriculture and Cooperatives (MoCA), Ministry of Foreign Affairs (MoFA))
Implement trade policy (e.g., Zambia Revenue Authority, Zambia Bureau of Standards (ZBS), Patents and Companies Registration Office (PACRO) Zambia Competition Commission (ZCC) etc.)
MoFNP MCTI MoFA MoCA Ministry of Justice and Legal Affairs ZRA PACRO ZBS ZCC Other line ministries & agencies Policy Direction Policy Formulation Policy Implementation
CSOs were not a part of the formal consultations until about 8 years ago
They are now involved in the processes of formulation, implementation and negotiations in trade policy
CSOs in Zambia that are working on trade issues can be divided into two broad categories:
local CSOs, for example, CSTNZ and CSPR, which lack adequate human and financial resources to follow all trade-related developments on a regular basis, most active with the WTO Ministerial Conference, etc., and often depend on technical and financial support of international NGOs
international CSOs like Oxfam and CUTS
An important development is the establishment of CSTNZ as a network of CSOs on trade issues.
The engagement of CSOs center around: awareness-raising and information sharing, research and analysis, lobbying and advocacy, and capacity building
Rural reach of CSOs must be strengthened, most CSOs are based in urban centres
Informal sector employees have no formal representation in CSOs, yet their interests are considered, like those of all disadvantaged groups of stakeholders, in CSO efforts to improve the trade policy process
Since 1991, many private sector organizations and businesses have started playing an increasingly active role, and the government seeks their inputs and views more frequently
Participation generally takes place through umbrella organizations
Important individual businesses in some sectors play a role
May be more active on one particular issue or sector than trade policy in its entirety
Example: stakeholders in the mining sector are organized in associations that often participate when their interests are being discussed
Note: umbrella organizations nor individual businesses are in a position to represent the interests of those employed in the informal sector
Private sector umbrella organizations participation has been inconsistent as they do not always have the required human and financial resources.
Conflicting interests exist: difficult to collect and collate the inputs and positions of all members and ensure a regular two-way feedback between their secretariats and members
National Working Group on Trade Policy
main forum in Zambia that brings together state and non-state stakeholders
headed by the Director of Foreign Trade at MCTI
MCTI serves as its secretariat
consists of 13 members of the private sector, civil society and the government.
sub-committees and working groups for specific issues, providing recommendations on relevant topics, such as various trade agreements, negotiations and sectors
Agriculture Consultative Forum (ACF)
solicits inputs from stakeholders and communicates to the relevant authorities through ACF Advisory Notes
helps the government in understanding the concerns and views of farmers’ unions and the private sector on the full range of agricultural issues, including trade
well established and good reputation as the main consultative forum to bring together the state and non-state actors
National Export Strategy Group
state and non-state actors
headed by a chairperson from the private sector
provides information on export-related issues and allows for stakeholders consultations on these issues
Steering Committee of Secretaries
consists of all Permanent Secretaries to ensure inter-ministerial coordination on all issues requiring coordination.
hardly any information is available on the functioning of this Committee and its effectiveness in ensuring inter-ministerial coordination on trade issues
literature indicates the need for greater coherence and coordination among various government ministries and agencies
Steering Committee of Secretaries all state actors for inter-ministerial coordination on all issues ACF State and non-state actors on all agriculture issues MCTI NWGT state and non state actors on all trade issues National Export Strategy Group State and non-state actors on export issues Fora-specific Sub-Committees, e.g. on WTO, EPA, COMESA and SADC Issue specific Working Groups, e.g. services, IPRs, TF
MCTI has made significant progress in reforming trade policy
claims to have consulted with stakeholders with regard to all these, with high stakeholders’ participation in consultations.
MCTI has been utilizing the NWGT for these consultations and encourages sectoral inputs from other relevant ministries.
The above shows that the MCTI position as the main government ministry to deal with all trade issues is well established. It also has established mechanisms for stakeholders’ consultations.
number of trained technical staff is limited
The few professionals in the ministry, no matter how competent and dedicated, cannot be expected to handle all the issues thoroughly and ensure continuous stakeholders consultation.
Room for improvement in the information flow to all stakeholders, particularly non-state actors
For example, the revised Trade Policy 1994 is still not on the MCTI website
Challenges: examples of uncoordinated action across relevant government agencies (ex. appreciation of the Zambian Kwacha in 2005)
Closer interaction would have allowed for a coordinated response
Less than optimal action because:
Ministries and agencies are focused on their own mandate , without looking at and responding to inter-linkages
Limited human and financial resources
Vision 2030 should be consciously used to tailor other policies, ensuring coherence and preventing contradictions
Improve capacities to see and understand interlinkages
MCTI should take initiatives to share information and consider establishing institutional mechanisms for regular input and feedback
successful in lobbying for certain issues
Lack of analytical capacity to critically evaluate trade policy
Conflicting Views, depending on: size, nature of economic activity, and benefits under existing policy framework.
large umbrella organizations cannot reconcile all the differences among various components of their constituencies
Lack of Interest : focus on international trade policy opposed to domestic trade policy, g enerally the representatives of the private sector participate in those meetings where the supply capacity issues are being addressed
Policies in the 1990s were designed with little knowledge and even less consultation with stakeholders:
outcry and criticism led to the initial opening up of the process of formulating development programmes, by engaging local non-state actors
Donors encouraged the government to undertake multi-stakeholder consultations.
sometimes provide financial and technical support to build the capacity of civil society
Cotonou Partnership Agreement (CPA) recognizes the role of non-state actors and provide for financial assistance for capacity building of CSOs
As a result of a good research base and policy analysis, the CSOs have built up a solid platform to lobby the government on issues that concern the general public, including trade-related issues.
CSTNZ is the nodal NGO for MCTI and other government departments
mechanisms and meetings organized by MCTI on trade issues
platform of round table meetings with relevant ministries
media campaigns that influence the public opinion and exert pressure on the government in favour of the CSO positions
trade professionals are generally in limited supply, only one economist at the University of Zambia had specialized in trade issues
no specialized think tank or research centre on trade issues
Ressources and capacities are an issue
exacerbated by a mushrooming of consultative meetings called by various sub-committees and working groups established by the MCTI under the NWGT
Streamline sub-committees and working groups into fewer sector-specific organs
some stakeholders are currently not included in the consultation processes, for example, consumers and parliamentarians.
Lack of technical knowledge and capacity to take full advantage of participation opportunities
The influence of various non-state stakeholders is not the same across sectors
There is a preference of the government authorities to deal with large umbrella organizations of the private sector and CSOs instead of individual enterprises and organizations
Better coordination and harmonisation of policies should be a main objective while revising the national trade policy (especially in regards to trade and development)
Consultative mechanisms should not only include stakeholders in discussions of trade policy, but also push for stakeholder participation in decision-making processes
No one-size-fits-all policy
Economists generally agree that open trade policy is good for development
features of good policy include:
Coherence with national development policy
Supportive of and be supported by other government policies
Balance the interests of all key stakeholders
Conform with the commitments of the country under the WTO and other regional and bilateral agreements
Accompanied by an appropriate implementation plan
Determines whether the key features of good policy are attained which in turn determines the contents of policy.
May not result in best policy
but context and country specific
But widest possible buy-in and support from all key stakeholders
Support and ownership ensure policy’s relevance and proper implementation.
Outlining the key elements of the process also leads to the identification of the relevant stakeholders.
Important assumption: key stakeholders are an active part of the process with opportunities for equal participation and proportionate influence.
Features of a Good Trade Policy Key Elements of Good Trade Policy Making Process Relevant Stakeholders Based on national development policy Clear guidance/directions from national development policy makers National development policy makers (e.g., Ministry for Planning and Development, President’s Office, parliament, etc) Linked with other governmental policies Inputs and feedback from other government ministries/departments Other relevant government ministries/departments (e.g., those dealing with agriculture, employment and labour, finance, competition and consumer protection, education and health, etc.) Linked with international commitments (to implement the commitments as well as to guide the positions regarding future possible commitments) Inputs and feedback from relevant ministries and negotiators Relevant ministries (e.g., Ministry of Foreign Affairs, etc.) and negotiators (e.g., dealing with the WTO agreements and negotiations) Balancing the interests of all key stakeholders Inputs and feedback from key non-state stakeholders Key non-state actors (e.g., representatives of the private sector, farmers, consumers, and the civil society) Clear implementation plan with adequate resources Commitment of required resources Relevant government ministries (e.g., Ministry of Finance) and donors (multilateral and bilateral)
all the key stakeholders have been identified
they have equal opportunity to participate in the process
none of them is allowed to disproportionately influence the process nor the outcome in favor of its own interests.
Seven action variables, applied in two different groups
Variables 1-4 require action of primary government ministry in trade policy
Variables 5-7 require action of all other stakeholders
Three distinct indices are calculated for other relevant government agencies, private sector, and CSO categories of stakeholders respectively
maximum value of 1 (when the appropriate action has been taken by the concerned actor)
intermediate value of .5 (when some action has been taken by the actor concerned but such is not sufficient).
minimum value of zero (when the action has not been taken at all by the concerned actor)
Overall ITPM rating out of 13, index includes 4 distinct parts
Increase awareness of political economy aspects of trade policy making in Zambia
Assess the inclusiveness of the trade policy making process in terms of capacities, actions, and participation of key stakeholder groups
Illustrate where further efforts must be made to improve stakeholder capacity and participation in trade policy
Facilitate the development of a more inclusive trade policy making process to create local buy-in of that policy within Zambia
Only such buy-in can ensure successful implementation of trade policy and the subsequent realization of larger development goals of the country
Action Variable Action by Action Value A. Identification of all key stakeholders MCTI Some identified = 0.5 B. Creating awareness about the need for trade policy MCTI Yes = 1.0 C. Establishment and functioning of formal consultative mechanisms MCTI Several established but sub-optimal functioning = 0.5 D. Regular information flow to the stakeholders including on the content of trade policy MCTI Ad hoc and/or irregular = 0.5 Part I Score MCTI 2.5/4.0 E. Regular participation in the process and feedback to the relevant authorities Other relevant government ministries/agencies Some = 0.5 F. Faithful representation of and regular feedback to the represented constituencies Other relevant government ministries/agencies Some = 0.5 G. Acquiring relevant knowledge and expertise Other relevant government ministries/agencies Some knowledge and expertise = 0.5 Part II Score Other relevant government ministries/agencies 1.5/3.0
Action Variable Action by Action Value H. Regular participation in the process and feedback to the relevant authorities Private sector and business umbrella organizations Yes = 1 I. Faithful representation of and regular feedback to the represented constituencies Private sector and business umbrella organizations Yes = 1 J. Acquiring relevant knowledge and expertise Private sector and business umbrella organizations Some knowledge and expertise = 0.5 Part III Score Private sector and business umbrella organizations 2.5/3.0 K. Regular participation in the process and feedback to the relevant authorities Civil society organizations Yes = 1 L. Faithful representation of and regular feedback to the represented constituencies Civil society organizations Occasional representation and/or irregular feedback = 0.5 M. Acquiring relevant knowledge and expertise Civil society organizations Some knowledge and expertise = 0.5 Part IV Score Civil society organizations 2.0/3.0 ITPM Index Score All stakeholders 8.5/13.0