Transcript Malawi - CUTS International

Fostering Equity and Accountability in the Trading System
(FEATS)
Patrick Chengo, Project Assistant
CUTS Africa Resource Centre, Lusaka
8 April 2009

Economic background

Explanation of Zambian trade policy
◦ Trade policy process
◦ Key government institutions
◦ Consultative mechanisms

Stakeholder views
◦ 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

Trends in Zambian Trade performance
◦ 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
◦ little progress in export product and market diversification
efforts
◦ Zambian integration in global economy has increased
Country
Share in
Total Exports
Switzerlan
d
South
Africa
Thailand
41.8%
DRC
Egypt
5.3%
5.0%
12.0%
5.9%
Country
South Africa
Share in
Total
Imports
47.4%
United Arab
Emirates
China
6.3%
India
4.1%
UK
4.0%
6.0%
• South Africa is the main import source (47.4% of total in
2007)
• Major Export destinations: Switzerland(41.8%) South
Africa (12%)

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

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
◦ period of liberalization: opening of trade, decentralization, and deregulation
of the economy
◦ 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

Zambian participation in IF processes
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◦ 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
◦ 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:
Process:
◦ 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
◦ Activities Include:
 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.)
Policy
MoFNP
Direction
Policy
Formulation
MoFA
Ministry of Justice
and Legal Affairs
MCTI
MoCA
Policy
Implementation
ZRA
PACRO
ZBS
ZCC
Other line
ministries &
agencies

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

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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
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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

Steering Committee of Secretaries
◦ 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
◦ consists of all Permanent Secretaries to ensure interministerial coordination on all issues requiring
coordination.
◦ hardly any information is available on the functioning of
this Committee and its effectiveness in ensuring interministerial 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 interministerial coordination on all
issues
ACF
MCTI
State and non-state
actors on all agriculture
issues
National Export
NWGT
Strategy Group State and non-
state and non state actors on all
trade issues
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.
Challenges:
◦ 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
Suggestions:
◦ 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, generally the representatives of the private
sector participate in those meetings where the supply capacity
issues are being addressed
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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
Participation: .
◦ 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

Recommendation:
◦ 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

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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
Based on national development
policy
Linked with other governmental
policies
Key Elements of Good Trade Policy
Relevant Stakeholders
Making Process
Clear guidance/directions from
National development policy makers
national development policy makers (e.g., Ministry for Planning and
Development, President’s Office,
parliament, etc)
Inputs and feedback from other
Other relevant government
government ministries/departments
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)
Balancing the interests of all key
stakeholders
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)
Inputs and feedback from key nonstate stakeholders
Clear implementation plan with
adequate resources
Commitment of required resources
Key non-state actors (e.g.,
representatives of the private sector,
farmers, consumers, and the civil
society)
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
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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
A. Identification of all key
stakeholders
B. Creating awareness about the
need for trade policy
Action by
MCTI
Action Value
Some identified = 0.5
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
E. Regular participation in the
process and feedback to the relevant
authorities
MCTI
Other relevant government
ministries/agencies
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
Other relevant government
ministries/agencies
1.5/3.0
Part II Score
2.5/4.0
Some = 0.5
Action Variable
Action by
H. Regular participation in the
Private sector and business umbrella Yes = 1
process and feedback to the relevant
organizations
authorities
Action Value
I. Faithful representation of and
regular feedback to the represented
constituencies
Private sector and business umbrella Yes = 1
organizations
J. Acquiring relevant knowledge
and expertise
Private sector and business umbrella Some knowledge and expertise = 0.5
organizations
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
L. Faithful representation of and
regular feedback to the represented
constituencies
Civil society organizations
Yes = 1
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