Thread by @TiChitsinde

Last week @FarmMakeoverCo asked if I could talk about what impact the Africa Continental Free Trade Agreement means for Zim farmers. Today I have a bit of time before church starts so let's see how much ground we can cover on that topic... What would be a good # for it...

#AfCFTAagric What is the African Continental Free Trade Agreement? It's a pact by continental leaders meant to make economic activity between & amongst African countries faster, simpler & cheaper. It has a number of components on tariffs, movement of people, infrastructure

#AfCFTAagric It's unfortunate that there hasn't been a single concise document breaking down what it is and how it sets out to actualise its vision, but we'll work on that. For now let's stick to what it will mean practically if you are in the Zim agric sector.

#AfCFTAagric There are 3 key tenets of interests: i. Stimulation of value addition of raw materials on the continent; ii. Increasing intra-Africa trade through simplified customs procedures, low/no tariffs & consolidated production; iii. Leveraging on continental critical mass.

#AfCFTAagric How do the 3 tenets work in practice? Tariffs are the most obvious, and will be the most contentious issue. In terms of the agreement, all African countries that sign up to the agreement are required to open up their markets to goods and services from other AU states

#AfCFTAagric Over the next 10 years, tarrifs are supposed to be removed on 90% of goods. There is a further 7% of goods that has a 13 year period for reducing tariffs with a 5year grace period. 3% of goods will remain with tariffs at full implementation of that portion of AfCFTA.

#AfCFTAagric Tariffs are a big part of how countries protect local markets from foreign products by making it more expensive/tedious to import goods vs purchasing locally. They help fix disparities in production costs to help domestic products better compete with imports.

#AfCFTAagric Removing the tariffs will mean that the process of importing goods will be cheaper & easier, & Zim can't punish imports through high tariffs just because the goods are available locally. This has a direct bearing on market pricing.

#AfCFTAagric The most obvious side of this is that agricultural produce from neighbouring countries with lower costs of production will be more attractive to local buyers, meaning those goods may get a greater share of the market, & drive down prices of local commodities

#AfCFTAagric Great for the consumer, not so great fro producers like you & I whose margins are being squeezed & may be driven to produce at a loss just to be able to retain market share against new entrants from other countries who have larger capacity & far lower costs

#AfCFTAagric This aspect is what many in the agric sector are worried about, and it's already playing out with regards to maize meal imports and complaints by millers about the pricing of imported maize meal & how local millers can't compete.

#AfCFTAagric That's something we will all have to work on & it's up to us to figure out how to address the production cost issue & attain an optimum level that enables us to compete (Yes, you need to know all your cost drivers & the reasonable vs unreasonable ones).

#AfCFTAagric That's just 1 side of the equation; there are also significant benefits in the offing from tariff reduction. When it comes to retooling, automation and digitisation of agricultural production, processing & value addition it's a great avenue for capital investment.

#AfCFTAagric If you are looking to get equipment it means you will pay significantly less for some things than currently is the case. Yes, some equipment/livestock/seeds/chemicals is currently duty free or has a low duty rate, but that's an exemption as opposed to defined policy.

#AfCFTAagric That means we can retool with cutting edge technology and be able to make significant savings on production costs and increase production capacity, which enhances our competitiveness against imported products (both basic & value-added goods).

#AfCFTAagric What happens to local producers of those products? Again that's another trade-off that we'll need to consider. Do we have the scale to continue producing locally to make it worthwhile to keep suporting them or do we provide funds for them to pivot to something else?

#AfCFTAagric It may mean gearing them to produce more specialised equipment/products for local & export markets if competing on generic items is not possible in the context of the broader market dynamics. Or significantly improving quality to justify premium pricing of the goods.

#AfCFTAagric From what we've looked at so far, it's clear that getting the most out of #AfCFTA requires a highly strategic & consolidated approach with lots of multi-sectoral involvement and consultation, which has been woefully missing so far. Hopefully that changes SOON.

#AfCFTAagric Moving on from the tariffs -we won't delve into the technicalities, that's a far deeper conversation that I'm not having with anyone for free - the next issue is how do the goods move between countries? #AfCFTA envisages a smooth system of getting goods from A - B.

#AfCFTAagric How will that happen? By having common "rules of origin" & similar rules on minimum standards of product quality. What this entails is common standards of identifying goods that have been produced on the continent that would be able to benefit from tariff exemptions

#AfCFTAagric It's not clear yet what form this will take but whatever form it takes technology will be a big part of the solution. Which means you & I need to formalise our operations & start working on digital footprint coz marketplace just grew from our hood to 1.3Bil people.

#AfCFTAagric In as much as #AfCFTA makes it easier for imports to come in, it also makes it easier for our goods to be exported to the rest of the continent. Whether it's the raw produce or value-added goods, there are lots of opprtunities to get Zim goods out there & compete

#AfCFTA Not every farmer will want to or be able to expirt directly. Right now the focus should be on current bulk buyers such as Willsgrove, Sunspun etc & how we can leverage them to actively take advantage & enter the export game. Nhimbe Fresh has a great model we can build on

Let me post these and continue before I lose the drafts in the thread so far.

Okay, tweets are up, we can proceed. We are far from meeting local demand through local production for most things so if you want to be a local player there is still incredible room for growth there. #AfCFTAagric

#AfCFTAagric raises another strategic question - if we can import something at 1/5 of local production cost should we continue to produce it locally or pivot to something else that's viable for the producer vs national security concerns around import dependency for key products.

#AfCFTAagric Standardisation means compliance requirements not only around the final product but production process, sustainability of methods, labour relations, safety health and enviroment, taxes. It's a whole raft of measures that will need to be built into our operations.

#AfCFTAagric There's a obvious and significant cost implication besides the technical aspects of getting operations to scratch & that again needs considerable thought around funding & implementation to make it happen which I haven't seen happening.

#AfCFTAagric Also what is the state of the supply chain currently & how do we optimise it to take advantage of the opportunities. That has very real implications on what planning there is around transport & logistics, cold chain, power supply & distribution, road & rsil networks.

#AfCFTAagric So you've managed to meet compliance requirements and you're ready to get to work feeding Africa, how you gna get it done? Well the agreement envisions the establishment of continental trade information platform for use to provide info on continental markets

#AfCFTAagric It will tell you what is needed/sells where, what you need to trade there, buyers' contacts & allow you to promote what you're producing to attract buyers. Which raises the question of what ZimTrade & AMA are doing to document our farmers & what they're producing...

#AfCFTAagric I'm sure the portal will have a plug-in to the country-specific trade body site for further details and so-on for more in-depth guidance. That's where the 2 bodies mentioned in the prior tweet come in coz people will want DETAILED info, which isn't there currently.

#AfCFTAagric I'll give you a simple eg of JUST HOW MUCH work needs to get done - how does Musika Analytics have way more detailed easily accesible data on production & pricing trends than Agricultural Marketing Authority, a whole regulator? ZFU & co need to come to the party too.

Another key point is payment. Intra-Africa payments are amongst the most cumbersome & expensive in the world because there's no unique Know Your Customer portal & integrated payments processing system (this again is a really technical issue so we'll stick to basics) #AfCFTAagric

#AfCFTA will involve creating both those things (work already has been underway on the KYC portal). That will reduce the time and cost of getting payments from one part of the continent to another. The faster we get cash into the farmers' pockets the better! #AfCFTAagric

As a basic primer on how #AfCFTA affects our farmers that suffices. If you made it to the end of #AfCFTAagric well done! You have come to the end of your free trial, please enter your card details to purchase the full product suite!😂

Before you come into mentions sideways & anyhow (coz vamwe venyu hamuna kunyatsokwana), please be guided by the above tweet. Please and Thanks.

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