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Oliver Kazunga Senior Business Reporter
LOCAL companies should diversify their export markets to reduce the trade risk associated with South Africa being Zimbabwe’s largest trading partner.Presenting results of the Local Export Manufacturing Capacity Survey conducted between October and December last year, Africa Corporate Advisors managing director Mike Nyamazana said South Africa was the single leading export destination for the country’s manufactured products.
“Seventy percent of exporters mentioned South Africa as their only or one of their markets. The survey showed that South Africa remains the largest competitor of the Zimbabwean manufacturing industry.
“It is also the leading export destination for Zimbabwe’s exports of manufactured products, making South Africa Zimbabwe’s largest trading partner.
“This is a serious economic risk in that, should anything happen to the South African market, Zimbabwe is left in a precarious position. Therefore there is a need to diversify our export markets to mitigate this trade risk,” he said.
Nyamazana said the survey, which is the first of its kind since 1980, was in the context of deindustrialisation that slowed economic growth since 2009.
“The context setting for the survey is also based on policy trajectory for government’s Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset 2013-18 policy) and the Industrial Development Policy, value chain business models which are key to export competitiveness,” he said, adding that one of the objectives of the survey was to provide authentic and up to date information on the export manufacturing sector.
At least 200 companies were sampled across the economy.
Results of the survey, which included companies that historically exported, presently exporting and those with potential to export, revealed that 71,4 percent of the firms that were exporting in the past decade had ceased doing so.
Reasons for not exporting were largely to do with the hassles of the exporting process, stiff competition, hassles of producing for exports as well as the fact that export clients were being supplied by competitors from Brazil and China.
“Other reasons include the quality of products falling down, lost skilled manpower, local demand in Zimbabwe has picked up.”
Nyamazana said the survey also showed that the engineering sector was by far the most export oriented sub-sector with 22 percent of the firms engaged in export.
“This sector can therefore benefit from the impending revival of Ziscosteel (now NewZim Steel),” he said.
The survey, he said, also indicated that most of the companies presently not exporting had products to compete in foreign markets.
“Our conclusion was that the challenges faced by exporters are viewed as largely being domestic (production related) rather than external related (market based).
“These include ineffective import controls, export costs and lack of export incentives; when the country introduced a multicurrency system, it stopped export incentives,” he said.
In light of the challenges facing the export sector, Nyamazana said it was imperative for industry to carry out a value chain analysis to determine what is or not feasible.
He said the government was also required to re-introduce export incentives or offer financial support to industry, reform or re-orient the Business Regulatory Agencies (BRAs) such as the Reserve Bank and the Zimbabwe Revenue Authority.
“BRAs need to refocus their operations to ensure that they focus on business facilitative policy implementation. Archaic business regulatory laws such as the Exchange Control Act and the Labour Act, among others which are no longer in accord with the current economic and business realities and focus,” he said.
Speaking at the same occasion, Industry and Commerce deputy director Mary Chin’onzo said the survey was critical as it provided government with focused information.
“The survey has actually given us focused information, information that will assist us especially now when we are guided by the Zim-Asset. My ministry has policies like the Industrial Development Policy that it has put in place for economic development. On the issue of policies, some of them need to be revisited because they are no longer in sync with the environment,” she said.
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