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Zimbabwe and Zambia have a lot in common besides being close neighbours and in several areas their economies are complementary rather than being in intense completion, so in some ways it is surprising that the trade volumes are not a lot higher than they are.
ZimTrade is trying to rectify this and is taking a strong team of 25 Zimbabwean companies to the Zambian Agricultural and Commercial Show in Lusaka early next month.
While there are few openings in agricultural trade, both countries having similar climates, growing almost identical products and both largely self-sufficient in food, there appears to be good openings for expanding commercial trade.
ZimTrade says Zimbabwean products have a good reputation in Zambia for quality and price. This is almost certainly because the things Zambians want to buy that are made in Zimbabwe need to be good quality and be competitively priced, otherwise no one would buy them.
Pricing is helped by the fact that we are both in Comesa, where the rules, the removal of barriers and the decrease in duties all help to make products produced in the member states more competitive in the other members.
We are also both in SADC, and while the free trade efforts here are less advanced, there has been considerable progress.
So the opportunities exist, so long as we have the right product of the right quality at the right price, and we need to tick all three boxes before any Zambia buyer is going to be seriously interested.
We also need to be careful not to make the error of our common coloniser, the British South Africa Company, the British Government and the decade long Federation of Rhodesia and Nyasaland of seeing Zambia as a backwater that could be exploited. In some areas this exploitation was severe, such as the ownership of the Zambian mineral rights by the BSA company until Zambian independence.
Southern Rhodesia’s settlers bought the Zimbabwean mineral rights at a modest cost during the Great Depression of the 1930s. Fortunately Zambia, like Zimbabwe, has been encouraging investment and modern industrialisation for some time.
In fact in many respects that country was ahead of us after President Levy Mwanawasa opened up the economy to investors with investor friendly policies and started the Zambian industrial revolution.
While 80 percent of the products on Zimbabwean shelves might be locally made, and a reasonable chunk of the rest coming from South Africa, there is also a growing amount of shelf space occupied by Zambian products, as can be seen when you read those little labels on the back of the packs. The fact that these products tend to be of high quality at agreeable prices shows that they have penetrated our markets by the same criteria our exporters need to follow if they are to make any headway in Zambia.
Trade has to be two-way to make any progress, and there appears to be a lot of potential as both Zimbabwe and Zambia grow their industrial bases and start looking at heavy industry.
The mineral resources are largely different, since the geology of the two countries is so different. Zimbabwe is largely built on an ancient craton, one of the original bits of continent created as the Earth cooled, while Zambia is largely later rock.
But two major missing minerals in the Zimbabwean line up, copper and cobalt, are among Zambia’s most valuable minerals. As we industrialise we will need more of both, probably a lot more of both, and the products and intermediate products made by a flourishing copper industry since Zambia will be looking, as we are, at adding value.
At the same time our sudden re-entry into the steel markets as the Dinson plant at Manhize comes on stream late this year, to be followed by phases that start producing rolled steel and a variety of stainless steels, seems to be a good source of the intermediate products that a rapidly growing Zambian industrial base will need. As has been noted, any progress in creating a Zimbabwean lithium-ion battery industry will require three main mineral products: lithium, nickel and cobalt, and Zimbabwe has no cobalt so the factories will need pure ingots from a convenient source.
Those batteries will be powering a large number of appliances, many with electric motors which tend to use a lot of copper. So we can both win. In fact an investor might find it worthwhile to make the batteries here and the motors there.
AfCFTA is designed to convert Africa into the world’s largest single free-trade area. This is noble and will help accelerate the development and progress of Africa. But even with free trade across the continent, it is likely that there will be more trade with countries that are closer, simply because the distances across Africa are so vast and added to the fact that many countries do not have coasts and ports, that will tend to make transport costs higher.
The same free trade will tend to make South Africa an important source of products for many of us in Southern Africa, but also open opportunities for industries in countries like Zimbabwe and Zambia to penetrate that major market at long last, so long as we have the right products at the right price and the right quality.
We also have with our common investment rules already seen some investors operating on both sides of the Zambezi.
This makes sense when you look at it from their point of view, considering the similarity of the two countries, and in any case there are some much older investors who have been doing this for much longer.
Sometimes marketing co-operation built on our trade may help to create the best products for a competitive African market.
Online Reporter