Southern Africa still Zim’s leading export market

shrinking, data compiled by the Confederation of Zimbabwe Industries has revealed.
According to the 2011 CZI manufacturing survey released last week, Zambia outperformed other regional market destinations, accounting for 29 percent of total exports this year followed by Malawi and

South Africa at 16 percent. Mozambique and Botswana accounted for 11 percent and 9 percent respectively.
Other regional markets consumed 11 percent of the local products while East Africa and European markets absorbed 4 percent.

Mozambique emerged as the fastest growing export destination, having grown from only 3 percent in 2005 to 9 percent this year.
Zimbabwe, however, lost its market share in South Africa and Botswana after it declined by 6 percent to 16 percent and 9 percent respectively.

Statistics show that Europe and East Africa also suffered a 5 percent drop from 9 percent in the past six years to 4 percent this year.
The analysis of the export survey shows that most manufacturing companies are still struggling to produce surplus for export.

“The companies that were exporting highlighted that export levels remained depressed due to challenges related to lack of working capital to meet orders and unavailability of raw materials,” noted CZI.
“In terms of destinations, our markets are still confined to Africa, mainly Southern Africa, with only 2 percent of the respondents exporting to East Africa and 2 percent to Europe.”

Apart from working capital constraints, which were affecting procurement of adequate raw materials, local products were not competitive on the international market both in terms of cost and quality.
“This is largely a result of high production costs and lack of modern technology.”

There is also inadequate knowledge of export markets, which has led to failure to penetrate these markets. Manufacturers were also failing to secure orders due to negative perception on Zimbabwean business.

In the 1990s, Zimbabwe used to export significant volumes to the European Union.
However, the EU-oriented exports have been the main casualty of the shift towards neighbouring markets, which occurred largely between 2001 and 2008.

At its peak in 2000, the manufacturing sector contributed a total 22 percent to the Gross Domestic Product and 37 percent of export earnings.
Last year its contribution to exports came in at 27 percent. Also contributing to manufacturing woes was a sharp decline in the agriculture sector, which provided the bulk of raw materials for producers.

The turning point in Zimbabwe’s transition to a new geographic pattern of trade was in 2003, when the value of total exports to neighbouring countries expanded overtaking exports to the EU, which fell 9 percent.

Between 2003 and 2008, the pace of contraction of exports to EU accelerated while exports to neighbouring countries expanded.
Hence, exports to neighbouring countries were the only bright spot in an otherwise grim picture of Zimbabwe’s foreign trade performance.