Domestic trade is an important pillar of socio-economic development. Besides promoting industrialisation and diversification, employment creation and economic growth, domestic trade naturally feeds into international trade through exports. In order to exploit the opportunities prevailing in the domestic market, there is need to create structures that strengthen backward and forward linkages between the agricultural and extractive industries and relevant sectors such as manufacturing.
The recent global crises, such as the Covid-19 Pandemic, that necessitated a shortage of supply of production inputs and finished products have given new impetus to having a thriving domestic market. In order to navigate trade shortfalls, many countries have since designed strategies that reinforce domestic trade and strengthen local value chains. One underutilised strategy that has come to the fore is the use of Public Private Partnerships (PPPs) in the quest to foster domestic trade.
The key rationale behind PPPs is to leverage public sector and private sector strengths [synergies]. Further, these partnerships work to reduce the investment risks shouldered by either party through repartition. While PPP is a broad term that typically applies to long term infrastructural projects that involve funding, planning, building and maintenance, it can also extend to simple and short management projects including those targeted at supporting domestic trade and local value chains.
In this regard, a PPP can be designed as a vehicle through which a country realizes its development agendas including bolstering domestic trade. This can be done through concerted efforts aimed at garnering support for local goods and services, ramping up technical research on local value chains, as well as creating platforms for policy advocacy through public-private dialogue.
Primarily, local content campaigns are tools for promoting the production and consumption of local products. The Proudly Zambian Campaign (PZC) is an official local content campaign initiated by the Ministry of Commerce, Trade and Industry (MCTI) and managed by the Zambia Association of Manufacturers (ZAM). In order to tactfully realise its goals, the campaign is steered by a national committee comprising of both public and private sector actors. This is a working example of a simple PPP that is specifically aimed at fostering domestic trade through a programme dubbed the Local Content Advocacy Initiative (LCAI)
Furthermore, policy reinforcements that tangibly promote the trade of local goods and services are often birthed from public-private dialogue platforms. In the manufacturing industry, the State represents the public partner and holds the reins of policy development and implementation. On the other hand, the private sector actors like local producers and service providers are best placed to provide input into policy formulation to ensure that it creates a conducive business environment that facilitates production of goods and services. A dialogue platform that brings together these two (2) actors is another form of a PPP that can foster the growth of the domestic market.
In this regard, ZAM holds ad hoc Pre-Budget breakfast meetings which provide a platform for local manufacturers to dialogue with the government on key issues around the business climate for the purpose of supporting domestic trade. These brief annual meetings could better achieve their objectives through designated public-private working groups that narrow in on the various subsectors throughout the course of the year.
Moreover, a study report by ZAM in conjunction with OXFAM, revealed that imported intermediate input products make up 65%-70% of local manufactured goods in Zambia. However, Zambia’s local content requirement is 35% in line with the National Local Content Strategy, developed in 2018 recognizing the need for transparency in assessing local content. The 35% local content requirement is therefore indicative of the gaps in the development of local content utilisation and value chains. Food processing, textiles and garments, wood processing, leather, mineral processing, construction as well as fintech industries are some of the value chains with great potential for development if more technical research is undertaken. This creates an opportunity for public private partnerships in the area of research for purposes of promoting domestic trade.
Public sector allocation of more funding to technical research anchored on developing domestic value chains works to exploit opportunities for local content utilisation in domestic markets. The successful implementation of this strategy borders on the quality of engagement and coordination between public and private stakeholders.
Conclusively, trade enabling structures and facilities are necessary for driving the efficiencies of the movement of goods in the domestic market. Public private partnerships amalgamate the strengths of cardinal stakeholders and allow for policy making and implementation that is both holistic and result oriented. It is therefore cardinal that the public and private sector in Zambia seek these partnerships as an avenue for promoting domestic trade in the future.
