malvernmugadzikwa
Trade Focus
Allan Majuru
ZIMBABWEAN products continue to make significant headway on the international market, thanks to efforts by President Mnangagwa to lay a strong foundation for local companies to establish a footprint in both existing and emerging markets.
Over the past few years, there have been spirited engagement and re-engagement efforts by the Second Republic, which have seen the country re-establish ties with Western countries, while at the same time strengthening relationships with emerging markets in the Middle East, Asia and the rest of Africa.
For example, diplomatic efforts in Saudi Arabia have opened new avenues for trade.
The opening of the Zimbabwean embassy in Saudi Arabia further enhanced relations between the two countries.
It is also expected to help local businesses to establish and strengthen their presence in the Middle East, fostering economic, political and cultural ties.
A recent market scan conducted by ZimTrade, the national trade development and export promotion organisation body, with support from the Zimbabwean embassy in Saudi Arabia and the Ministry of Foreign Affairs and International Trade, revealed export opportunities in sectors such as horticulture.
The objective of the market scan was to investigate the dynamics and characteristics of the Saudi Arabian market, particularly the economic hub, which is Riyadh, and identify trade opportunities.
The market scan gave ZimTrade an opportunity to identify specific export opportunities, engage potential buyers of Zimbabwean products and identify trade events in that market that local businesses can participate in, such as the Saudi Food Fair.
About the market
With a population of 37 million people, Saudi Arabia’s gross domestic product (GDP) was US$1,07 trillion in 2022, with a per capita GDP of US$30 447, indicating a relatively high average income level.
The economy mainly depends on oil.
However, its economy is undergoing transformation, as it implements reforms to reduce dependence on this resource, diversify income sources and enhance competitiveness.
The country is becoming a transport and logistics hub for Asia, Europe and Africa.
Saudi Arabia is an active member of the United Nations, the Gulf Cooperation Council, the Arab League, the Arab Air Carriers’ Organisation, the Organisation of Islamic Cooperation, the Organisation of the Petroleum Exporting Countries (OPEC) and BRICS+.
The country is also a dialogue partner of the Shanghai Cooperation Organisation.
It sources a significant portion of its fruits and vegetables from various countries around the world.
Its major import partners for horticultural products include countries like India, Egypt, the United Arab Emirates, Netherlands and the United States. In terms of trade, its imports from Africa have increased by over 150 percent from US$4,08 billion in 2018 to US$10,6 billion in 2022.
Egypt and South Africa are the major African suppliers, accounting for 3,5 percent and 0, 6 percent of total imports, respectively.
Opportunities
Saudi Arabia, known for its high spenders, presents significant opportunities for Zimbabwean produce, particularly fruits and vegetables, as well as meat and meat products. Much of the horticultural produce, including that for hotels and restaurants, is imported.
According to Trade Map, Saudi Arabia imported horticultural produce worth US$3,5 billion in 2021, up from US$2,7 billion in 2017.
Some of the top imported products in 2022 that local farmers can supply are citrus fruits (US$426 million); berries (US$234 million); apples, pears and quinces (US$209 million); and tea (US$223 million).
Other top imported products in the market were bananas (US$295 million); nuts (US$203 million); tomatoes (US$141 million); onions (US$156 million); dried leguminous vegetables (US$190 million); dates, figs, pineapples, avocados, guavas and mangoes (US$149 million); and grapes (US$129 million).
Over the past five years, Africa has been providing about 30 percent of Saudi Arabia’s horticultural requirements, and this amounted to US$1,1 billion in 2022.
Citrus imports from Africa amounted to US$355 million, coffee (US$223 million) and cut flowers (US$82 million).
Local farmers and businesses can exploit low-hanging export options such as oranges, grapes, pears, avocados, potatoes, shelled chickpeas, guavas, mangoes, stone fruits, tomatoes, strawberries and fresh-cut roses and buds.
Further, Saudi Arabia presents a growing market for meat and meat products.
The growing demand has been fuelled by a rising population, high incomes and religious practices. Cultural and religious practices play a significant role, with strong demand for halal-certified meat.
Additionally, rising incomes and a growing middle class are resulting in an increase in demand for high-quality meat options.
As lifestyles and dining habits shift towards convenience foods, including meat-based dishes, the market is set to continue its upward trajectory.
To enter this market, meat producers must ensure their products are halal certified. Certification also applies to processed foods, and it facilitates market entry.
Another factor to consider when accessing the market is packaging.
Local businesses aiming to enhance their competitiveness should focus on convenient packaging for consumers and compliance with regulatory standards.
Apart from products, there are also opportunities in services, such as education, where Zimbabwean educators can benefit from the renewed focus on the sector by Saudi Arabia.
With around a quarter of the national budget allocated to education and training in recent years, Saudi Arabia is committed to substantial investment in this sector.
In terms of doing business in the country, foreign businesses can operate in Saudi Arabia without appointing a commercial agent and are allowed to sell directly to Saudi companies from abroad.
However, appointing an agent or distributor is the most common method for entering the market.
These relationships are regulated by the Ministry of Commerce.
Companies can also have multiple agents regionally. Agency agreements must be approved by the ministry.
For government contracts, which are primarily handled through local tenders, only Saudi companies typically qualify to bid.
In view of this, having a local agent or partner becomes essential.
Allan Majuru is the chief executive officer of ZimTrade.
Online Reporter