pressrel september2000

PRESS RELEASE
September 2000

COMESA'S FREE TRADE AREA AND ITS SOCIAL IMPLICATIONS

The current regional efforts through COMESA aimed at uplifting member countries' economies are being widely commended. The putting ijn place of the COMESA Free Trade Area where there shall be no trade barriers is particularly commended, especially considering the role of trade in national development.

However, the Jesuit Centre for Theological Reflection (JCTR) is deeply concerned about the social implications of the COMESA Free Trade Area that is taking effect end of this month, says Muweme Muweme, Coordinator of the JCTR's the Economic and Social Development Research Project.

A major concern arises out of the likely reduced government reveneue from duty charges and how thwe government will meet its requirements for expenditure in various sectors with a weaker revenue base.

This concern is a very critical one that appears to have been igniored. Acoording to Muweme, ''There could be a situation where in order for government to have revenue, it might resort to heavy reductions in social sector spending, education, health etc. And given the already existing inadequate spending on these sectors, the situation might be worse with the coming of the Free Trade Area.''

Government might also resort to raising taxes, which again would mean an added burden to the already heavily taxed few people in the formal sector. This will obviously curtail people from meeting education, health and food requirements.

This situation is particularly dangerous now, when so many Zanbians cannot afford to meet the cost of the monthly food basket due to the ever-widening gap between their salaries and the cost of basic commodities. For example, the cost of the JCTR food basket for a family of six in Lusaka during September was K278,375.00, representing an increase of K6,070.00 from the August figure of K272,305.00.

Whereas these concerns are thre, what is worrying is that there have not been much discussion or serious studies into the social implications of the FTA for Zambia. Muweme further says ''We know for certain that there is not a watertight argument for the FTA as far as Zambia is concerned. It is a game being left to chance!'' It is also worrying to note that while some countries may benefit from the FTA arrangements because of having relatively stronger economies, Zambia stands to lose on various accounts.

First, Zambia is a high cost area for production partly because of being landlocked. This may mean that even foreign firms wishing to set-up subsidiary companies for the sake of taking advantage of the FTA, may decide to set-up their companies elsewhere.

Second, there is no manufacturing sector in Zambia to take comparative advantage of the COMESA FTA. The few manufacturing companies that still exist cannot compete effectively with foreign firms. The negative trade balance that the country has been experiencing could just move to an even worse position.

Third, the agricultural sector continues in a precarious situation and there are few eport agricultural products being generated. It appears before this problem is remedied, the country will have to experience an inflow of foreign products.

All these factors have great implications on the social well being of the people. Employment levels may move from their current unpleasant state to even lower figures. This will mean more people struggling to meet the cost of the food basket which is anticipated to continue rising. Moreover, in the whole FTA equation, there is not much talk about free movement of people and what this might mean for Zambia.

According to Muweme, there is need to critically examine the social implications of the COMESA FTA and to be prudently cautious about the whole approach to it. ''Zanbia cannot afford to go beyond the current poverty levels as manifested in the inability of most people to afford the basic necessities of lofe.'' Presently, there is every reason to be aaprehensive about the COMESA FTA.