Coherent Trade Strategies for Zimbabwe Under the AfCFTA: An Application of the Partial Equilibrium Model

The chapter employed the World Integrated Trade Solution-Software for Market Analysis and Restrictions of Trade (WITS-SMART) simulation and Trade-based Index Approach to establish coherent trade strategies for Zimbabwe in the dawn of the African Continental Free-Trade Area (AfCFTA). Scenario 1 simulations show that AfCFTA will create US$421 million worth of trade and US$75 million of trade diversion annually, with maize and soybeans having the highest potential for generating trade of over US$100 million per year, whilst motor vehicles are most vulnerable to trade divergence. Zimbabwe will lose approximately US$280 million in tariff revenue per year, mostly through tobacco. Exports will rise by around US$496 million annually, with agricultural products contributing the most, whilst welfare will increase by US$50 million. The Trade-based Index Approach shows that African countries are lowly integrated. Furthermore, the revealed comparative advantage index discloses that tobacco, nickel ores, natural abrasives, hides and skins, pig iron, gold (non-monetary), and sugar have some of the highest revealed comparative advantages for Zimbabwe. Thus, strategies aimed at enhancing the trade policy included the review of the country’s sensitive products as well as implementing candid and irreversible liberalisation policies. Likewise, further development of the agricultural sector through the introduction of market-driven incentives coupled with government-led direct input provision schemes and tariff and tax reform are other strategies that may be considered.