Exploring Zambian Trade System: Impacts & Analysis

In this post we shall explore the Zambian Trade System, with emphasis on the local and international trade as well as their implications to Zambian economy.

• Trade is the selling and buying of goods and services. There are two forms of trade in Zambian Trade System:
• Local trade, also called domestic trade
• International trade also called external trade.

Chain of distribution

This chain makes goods available for people to buy.

• Producers produce natural goods and raw material, for example through farming or mining. They sell their goods to wholesalers or to manufacturers.
• Manufacturers include the industries that turn raw products into other products. For example, furniture or canning factory produces canned fruits. They sell their products to wholesalers or directly to consumers.
• Wholesalers buy goods on a large scale from producers or manufacturers. They do not sell direct to consumers, but supply to retailers.
• Retailers sell things in smaller quantities. Supermarkets, shops and street traders are all retailers.
• Consumers are businesses or people who buy goods from retailers. The purpose of all the links in the chain of distribution is to supply goods to consumers.

Zambian Local Trade

Local trade is buying and selling that takes place within the boards of a country.

Local traders sell goods in different place:

• Street and market traders sell small quantities of cheaper goods along the side of the road or at local markets. They are usually entrepreneurs who started their own small businesses.
• Shops range from small community shops with a limited range of goods to larger chain stores and supermarkets. Smaller shops are often managed by the owner.
• Online trading allows retailers to sell goods to consumers via the internet.

INTERNATIONAL TRADE

International trade is the trade between different countries. It involves the export of goods from one country and the import of goods into another country.

Advantages of international trade

• Zambia’s main revenue comes from the export of copper and other agricultural products.
• Competition from international trade can also force domestic firms to become more efficient through modernization and innovation
• Zambian Trade System benefits from foreign direct investment (FDI) from international who invest large amounts of money and equipment to set up businesses in Zambia.
• International trade also enables a country to consume more than it would be able to produce if it depended only on its resources.
• International trade allows access to a wider range of goods from different countries. E.g Zambia imports cars from other countries.
• It improves economic relations among nations
• International trade encourages the development of better transport and communication links between different countries.

Disadvantages of international trade

• International trade and the demand for cheap products have made developing nations a dumping ground for second-hand goods. E.g Zambia imports second-hand vehicles from Japan which produce large amount of carbon monoxide.
• Local culture and industries may be affected negatively by foreign imports. E.g Nigerian films now dominate the Zambian market and have affected the local film industry.
• Foreign trade can make developing nations dependent on stronger economies. The weaker country may then have to accept whatever terms the stronger trading country set, even if it is not to the advantage of the weaker country.

Challenges associated with trade

Poor transport and communication

• The poor road system in many parts of Zambia negatively affects the Zambian Trade System as it makes it difficult for farmers and fishermen to get their perishable goods to the urban markets.
• Limited cell phone and landline coverage in rural areas limit their ability to communicate effectively with customers.

Unfair competition

Large countries such as China can produce goods such as textile on a large scale and sell the goods cheaply making it impossible for smaller local textile companies to compete

Strict requirements for imported products are set by foreign market such as the United States of America and the countries that make up the European Union. This makes it difficult for Zambia to export agricultural and other products.

Poor quality of products

Goods imported cheaply from countries that do mass production are often of poor quality, and may even be dangerous to the health of people and animals.

Counterfeit products

Counterfeiting of goods such as brand-name clothing, CDs and DVD is a serious crime. It can have negative effects on the income and reputation of the original products.

Porous borders

• Smuggler who want to avoid paying import duties at the border smuggle goods across the Porous borders. This means that there are many unprotected areas where smugglers can slip through.
• Poor roads in larger parts of Zambia make it difficult for the government to patrol all the countries borders. Smugglers therefore make use of tracks that cross the border in remote areas to smuggle goods across the border.
• Inadequate harmonized standards
• Inadequate harmonized standards are applied by countries with regard to what products may be imported into a country.
• Manufacturers therefore have to work with many different sets of regulations from different countries if they want to export their products to different countries.

Crimes associated with Zambian Trade System

Smuggling

Smuggling involves bringing goods into the country illegally to avoid paying import duties, or taking illegal goods out of the country.

Counterfeit products

Businesses who are more interested in making a quick profit than in doing business legally also counterfeit goods such as brand names, clothing, CDs and DVDs. The copies are poor quality, which damages the reputation of the original brands.

Fraud

• Consumers who buy counterfeit goods are also guilty of a crime.

Human trafficking

Human trafficking involves transporting people by force, fraud or deception and against their will from one country to another, or within a country. It can be regarded as the illegal modern equivalent of the slave trade.

Drug trafficking

• Drug trafficking involves the smuggling of illegal drugs. Large crime syndicates make huge profits from drug addicts who will do anything to pay for the next “fix”.
• Zambia also serves as a transit route for drugs moving from one neighbouring country to another.