adminTrade Focus Allan Majuru
The curtain comes down on an eventful year for exporting businesses.
The year has seen a concerted effort, from both the public and private sector, to increase the nation’s exports, albeit the challenges that continue to affect the production capacity of local businesses.
According to ZimStats, trade performance from February to October shows that the trade deficit decreased by 55 percent from the US$1,31 billion recorded during same period last year, to the current US$587 million.
On the other hand, the total import bill was US$3,6 billion, a 33 percent decrease from the US$5,35 billion recorded in the same period in 2018.
Although the trade deficit decreased, Zimbabwe’s total exports for the same period amounted to US$3,01 billion, indicating a 25 percent decrease from the US$4,04 billion recorded during the same period in 2018.
Going forward, it is imperative that trade performance be skewed towards increasing exports of value-added products while at the same time decreasing imports, particularly value-added commodities that can be manufactured locally.
The drop in total exports can be attributed to a number of challenges that affected the capacity of local businesses, including shortage of energy.
Cyclone Idai, which struck the Eastern parts of the country, also dampened export prospects of farmers from the region, who had been working towards increasing exports of horticultural produce such as pineapples.
Despite the decline in exports this year, exports of manufactured products registered an 8,5 percent growth between February and October 2018, compared to the same period in 2018.
The increase in manufactured exports was mainly driven by processed foods and beverages which registered a 40 percent growth. In value terms, this sector’s exports increased from US$54,5 million to US$76,1 million.
The sector’s contribution to total exports increased to 2,5 percent from the 1,3 percent recorded during the same period in 2018.
Raw hides and skins registered an increase of 68 percent from the US$7,9 million recorded in the period February to October 2018 to US$13,3 million in the same period in 2019.
The main contributor to this increase were exports of bovine hides.
The leather sector exports, month on month, increased to US$252 000 in October 2019 from US$34 000 in September 2019. This indicates a 627 percent increase.
Notable increase was in the export of leather clothing accessories, as well as reptile leather and goat leather.
Minerals remain the country’s largest foreign currency earner, contributing US$1,97 billion in 2019, from the US$1,88 billion recorded last year.
Although exports grew in these areas, some sectors have been performing below capacity.
For example, exports of chemicals — excluding fertilizers and pharmaceuticals — have gone down from US$1,8 million between February and October 2018 to US$880 000 in the same period in 2019, representing a 50 percent decrease in value exported.
To achieve increased exports, there is need for public and private sector players to create synergies as well as work together to address challenges that are affecting production of export products.
Speaking during the conference, President Mnangagwa urged the public and private sector to combine efforts to increase Zimbabwe’s exports.
“There is urgent need for both the public and private sectors to synergise efforts and collectively take appropriate steps to boost our country’s exports, which is the most sustainable way to stabilise and grow our economy.
“We must all work with unity of purpose to facilitate trade and investment as well as ensure trade policy predictability and sustainability,” he said.
The conference remains a key highlight for the exporting community, designed to bring together all stakeholders under one roof to map a way forward on how to stimulate production and export growth. In line with the Government’s devolution drive, this year has seen the development of export strategies and plans for all the provinces getting into motion.
Going forward, all provinces are expected to expedite growth of exports by focusing on niche products and services that enjoy competitive and comparative advantage.
In the coming year, ZimTrade will be working on putting in place export clusters at provincial level.
Also, ZimTrade — the national trade development and promotion organisation — will work closely with all provinces in developing their export capacities as well as identifying key markets for their products and services.
To propel exports growth, two policy documents were launched this year — the National Trade Policy Vision and Export Promotion Strategy.
The trade and export blueprints are expected to propel Zimbabwe’s industrialisation towards a transformed and internationally competitive economy driven by robust free and fair domestic and international trade.
Once under implementation, the policy and strategy document will complement existing instruments such as the National Trade Policy (2019-2023), which is anchored on increasing Zimbabwe’s domestic and international trade competitiveness.
The National Trade Policy Vision and Export Promotion Strategy includes guidelines on the introduction of Government-private sector led reforms, to facilitate growth in exports of goods and services.
This year also witnessed significant changes in the economy, with a Statutory Instrument abolishing the use of the multi-currency system impacting on exporting businesses.
Previously, the multi-currency system had rendered local products uncompetitive on the global market, given the existing dominance and strength of the United States of America (US) dollar.
At the same time, the continued use of the US dollar on the domestic market meant it was cheaper to import products, thereby raising the import bill at the expense of exports.
As such, the abolishing of the multi-currency system brought some relief to exporting businesses, who are now on the verge of reclaiming some markets in the region and beyond.
However, there is need to acknowledge that some local businesses, particularly Small and Medium Enterprises, still face challenges in accessing the foreign currency, which they need to acquire raw materials.
But with regards to export development, a line of activities were completed, targeting capacity development of local companies so that they are competitive on the export market.
With the support of local and international partners, ZimTrade conducted several export awareness seminars as well as technical intervention and training programmes to improve the competitiveness of local companies.
Local companies will also benefit from ZimTrade’s partnership with Japan External Trade Organisation (JETRO) following the signing of a Memorandum of Understanding (MoU) to strengthen cooperation and collaboration between the two institutions.
Implementation of the MoU is expected to result in increased exports to Japan on a range of products such as horticultural produce, value-added minerals, ferro-alloys, vermiculite, leather and leather products.
Export development also entails provision and access to reliable market information.
Market surveys were conducted in Zambia, Malawi, Angola and Namibia to explore the products and services that have market potential in the country, as well as to establish contacts with potential buyers.
Information from this research is helping local businesses to penetrate the export market.
On the export front, this year has seen more local companies participating on the global market. This year alone, ZimTrade facilitated the participation of 114 companies in several regional and international trade missions and exhibitions. These included the Zambia Agriculture and Commercial Show, DRC Mining Week, Global Expo Botswana and the China Trade and Investment Expo.
Participating at these events gave the companies an opportunity to showcase their quality products.
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Outward seller missions were also conducted, including the United Kingdom (UK) Trade Mission, which is aimed at expanding trade between the two countries and complementing Zimbabwe’s re-engagement efforts.
The mission provided an opportunity for local companies to interact with UK buyers. They also got to establish linkages that will make it easy for local products to penetrate the UK and Europe markets.
Buyers from the UK expressed interest in Zimbabwean products, especially the horticultural produce that was at the exhibitions.
The growing interest in Zimbabwean products is expected to unlock export opportunities for value-added products in the UK and the other European countries.
Zimbabwean products are known for their quality. Local products such as Mazoe and Tanganda Tea have made a mark on the UK market.
Online Reporter