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Dumisani Nsingo, Senior Business Reporter
THE country’s clothing industry is calling on the Government to expedite the process of engaging its South African counterpart to reverse the termination of the Bilateral Trade Agreement (BTA) to enable local manufacturers to tap into the neighbouring country’s lucrative market.
Zimbabwe Clothing Manufacturers’ Association (ZCMA) chairperson Mr Jeremy Youmans said it was important for Government to work on reserving the trade pact so as to rejuvenate the country’s industrialisation drive while aiding the growth of the clothing industry.
“The Government needs to urgently address the issue of the continuance of the BTA. Without it, it is very difficult for most players to compete in the South African market,” he said.
He said South Africa remains the country’s largest market in Africa with its proximity to the country being an added advantage.
“South Africa is the largest market in Africa and offered local manufacturing a great advantage due to distribution advantages. However, South Africa continues to import most of its goods from other countries.
“South Africa is a highly competitive market. In the case of clothing, most of the clothing sold in SA is imported but only a small amount of that is imported from Sadc countries including Zimbabwe,” Mr Youmans said.
South Africa, last year gave notice of its intention to terminate the trade agreement which had been in place since 1964, opting for the Southern Africa Development Community (Sadc) Trade Protocol on Trade. For South Africa, the Sadc Trade Protocol on Trade is more comprehensive but for Zimbabwe — which in 2016 imposed a ban on a wide range of South African imports under Statutory Instrument 64 — the deal means the country stands to lose its preferential access to South Africa.
The agreement favoured Zimbabwean exports of clothing and textiles due to relaxed rules of origin of “single transformation” compared to “double transformation” under Sadc.
“The Sadc Protocol on Trade defines rules of origin which restrict what can be sold duty free within the region. While it is possible for manufacturers of work wear and denim wear to meet these rules, the vast majority of clothing garments cannot meet the rules of origin criteria,” Mr Youmans said.
He said the country’s clothing products continue to struggle on the South African market due to lack of competitiveness as the market is saturated by cheap imports mostly from Asian.
“Zimbabwean manufacturers trying to enter the South African market have to compete against many imported goods, sold under subsidies conditions, and South African government subsidies. Our Government does not have the resources to subsidise its local manufacturers and therefore it is very difficult to compete on this unlevel playing field,” Mr Youmans said.
Since 2007, South Africa has always maintained a trade surplus with Zimbabwe with the surplus widening over a period of time mainly due to the economic challenges experienced in Zimbabwe and the volatility of the rand.
In 2018 South Africa remained the larger market for Zimbabwean products absorbing 51 percent of total exports, followed by the United Arab Emirates on 18 percent, Mozambique (15 percent), Zambia (10 percent), Belgium (two percent) and China (one percent).
On the other hand major import source markets were again South Africa, 39 percent, Singapore (22 percent), China (six percent) and the United Kingdom (four percent) and Japan (four percent). Mr Youmans also said as part of efforts to ensure a balance of trade in the Sadc trading bloc there was a need for South Africa to consider revisiting the BTA.
“If South Africa is true to the principles of Sadc, it would make sure that it maximises its imports from the region it purports to lead and lessen the imports it currently makes from Asia. Strategically, given the dominance of South Africa in the regional market, it is common sense for them to develop the regional market better, so that it can expand its own trading environment,” he said.
@DNsingo
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