Andrew
Trade Focus
Allan Majuru
Zimbabwe’s economy is on the rebound, with exports contributing the bulk of foreign currency earnings.
Recent figures from ZimStat show that the country’s export earnings recorded a 39 percent jump between January and April this year compared to the same period last year.
For export-anchored economic growth to be sustainable, President Mnangagwa’s Government, through the National Development Strategy (NDS1), has since identified value addition and beneficiation as critical to structural transformation.
However, value addition, especially for export-related products, needs to be structured, ensuring that local companies take part in strategic products and regional value chains leveraging on the country’s competitive and comparative advantage.
NDS1 has already identified quick-win value chains for development, including agro-based value chain, pharmaceutical value chain, and bus and truck assembly value chain.
Iron and steel and general engineering value chain; and plastic waste value chain are also considered quick-wins for Zimbabwe.
Taking part in these value chains could be a starting point for companies that intend to position themselves at strategic points along regional value chains.
Regional value chains
Southern African Development Community (SADC)’s Regional Indicative Strategic Development Plan (RISDP) 2020-2030 identifies prioritising value chains as enablers to industrial development.
Some of the regional value chains being developed in several SADC member states under the Support to Industrialisation and the Productive Sectors in the SADC Region (SIPS) programme include agro-processing, pharmaceutical and leather sectors.
Overall, these sectors have huge potential to facilitate job creation, infrastructure development and improved productivity, among other benefits.
Zimbabwe already enjoys competitive advantage in these areas.
For example, during the NDS1 period, priority on agro-processing will involve development of soyabean value chain, fertiliser value chain, cotton value chain, sugarcane-to-fuel value chain, dairy value chain and leather value chain.
Leather value chain
The leather value chain is a low-hanging fruit given the country’s competitive advantage in livestock production and abundant wild animals for exotic leather.
Zimbabwe boasts of good-quality leather and the United Nations Conference on Trade and Development (UNCTAD) believes the country produces more leather compared to other countries in the region.
Thus, the leather sector has potential to set the country on a positive path towards sustainable economic growth, employment generation and poverty reduction.
The diverse selection of leather ranges from domesticated bovine to the African buffalo found on the wild escarpment and could potentially earn the country more if it specialises on manufacturing leather products.
While revenue is being generated from exporting raw and processed leather, there is potential to export more if manufacturing becomes centralised.
UNCTAD also says Zimbabwe has potential to export products such as footwear, seats, trunks, suitcases, vanity cases, executive cases, briefcases, school satchels, spectacle cases and binocular cases.
Other products with potential for export are camera cases, musical instrument cases, gun cases, holsters and similar containers, travelling bags, insulated food or beverages bags, and toile.
Although manufactured products offer best wins, there are also opportunities for local companies to position themselves as processors of raw leather by getting supplies from countries such as Botswana.
The current tanners, who represent small-, medium- and large-scale players, produce wet blue and finished leather.
These tanners can supply countries in the region for further processing of products such as tanned or crust hides and skins of bovine and wild animals (exotic leather).
So, there is need to address constraints affecting producers of leather and leather products to ensure they can effectively participate in regional value chains.
For example, the sector is dominated by small to medium enterprises and, therefore, needs assistance in production techniques to improve the quality of their products, especially focusing on finishing and stitching.
Agro-processing value chain
Zimbabwe’s agricultural sector, which is the backbone of the economy, offers huge export opportunities.
When compared to other countries in Southern Africa, local agriculture is better developed and positioned to support countries that are still growing their capacities.
One of Zimbabwe’s competitive advantages is production and supply of different seeds into growing regional markets such as Malawi, Democratic Republic of Congo, Tanzania and Namibia.
Processed foods
Over the years, local companies have mastered the production of quality consumer goods that are highly sought in the region.
Using raw materials from countries such as Zambia and South Africa, the country can potentially become a leading supplier of processed foods in the region.
Products that can be produced, with supplies from countries in the region, include confectioneries, cordials, cooking oil, snacks, long-life milk, powdered milk, chips, tinned foods, processed meats and milk-based fruit juices.
Local businesses have potential to competitively supply processed foods to regional markets such as Zambia, Botswana, Democratic Republic of Congo and Malawi, riding on bilateral and multilateral trade agreements.
Further, the country has the right climatic conditions to grow niche wild fruits and traditional herbs.
Zimbabwe has vast wild fruits ranging from mauyu (baobab), masau (ziziphus mauritania), matohwe (azanza garckeana), natural herbs, zumbani (lippia javanica), muhacha (hissing tree) and moringa.
Wild fruits and herbs can be value added, packaged and branded for exporters to earn even more.
To tap into the regional value chain, local manufacturers need to address their competitiveness.
In this rapidly changing environment, companies need to upgrade technological and human skills to boost both performance and competitiveness.
Investment in key areas such as research and development will also make it easy for producers to continuously improve their products in line with consumer expectations.
Pharmaceuticals value chain
Zimbabwe currently exports pharmaceutical products to regional markets and has potential to increase its market share.
Here, the country can focus on production through leveraging on research and development that can be done in other SADC countries.
Government has made a commitment to increase locally produced essential medicines, increase proportion of companies complying with international World Health Organisation (WHO) standards, as well as reduce the medicines import bill.
Increased production, coupled with more players in the pharmaceutical sector complying with international standards, is expected to improve the sector’s competitiveness, which, in turn, will make it easy for locally manufactured products to perform in regional markets.
Apart from potential in production of pills, there are opportunities for local companies to position themselves as leading producers of products such as personal protective equipment, mosquito nets and medical equipment.
Allan Majuru is ZimTrade’s chief executive officer
Online Reporter