Andrew
Trade Focus
Allan Majuru
THE recently released figures showing a massive jump in the contribution of exports to total foreign currency receipts, is a welcome development, particularly after the first year of implementation of the National Development Strategy 1 (NDS1 2021-2025).
The NDS1, launched by President Mnangagwa in November 2020 identifies exports, primarily value-added products and services, as crucial in the growth of the economy.
According to statistics in the Monetary Policy Statement presented by the Reserve Bank governor, Dr John Mangudya last week, the contribution of export proceeds to total foreign currency receipts grew by 66, 6 percent in 2021, a positive development that is expected to strengthen the economy.
Although the growth in national exports follows spirited efforts by the Government in its economic diplomacy agenda, complemented by activities undertaken by ZimTrade — the national trade development and promotion agency — to promote local products and services in foreign markets, there is also need for provinces to identify low-hanging fruits that will make it easy for them to boost their contribution to national exports.
But what should
provinces focus on?
In line with the ongoing devolution exercise, focused on improving the contribution of all provinces to the national economy, riding on natural resources they are endowed with, ZimTrade conducted studies across all provinces to unpack products and services with export potential.
Results of the studies indicate that some provinces have a strong grounding in certain products and services that have performed well for decades.
What is important going forward, is for provinces to use these successful products as a springboard for pushing more products into export markets, leveraging on current established networks.
For example, the studies identified timber as the “green diamond” of Manicaland, with potential to contribute more in export value.
Why timber in Manicaland?
Zimbabwe’s commercial timber industry is concentrated in the Eastern Highlands of Zimbabwe in Manicaland, which is the province with favourable climatic and environmental conditions for the fast-growing exotic tree species.
Manicaland is home to several types of wood that can be used for structural purposes in building and construction; treated and untreated poles for transmission lines; hardwood for furniture manufacturing; and industrial wood for packaging, pallets, and cable drums.
Current producers in Manicaland employ internationally recognised forest practices and this has resulted in some of the highest quality and sustainably managed plantations in Africa.
The plantations are grown mostly for the production of timber, wooden planks, pulpwood, sawlogs, and veneer logs.
The hardwood plantations are of eucalyptus species and black wattle. The main hardwood products are poles, pulpwood, charcoal and wattle extract.
With excellent soils and climate, Manicaland province has produced timber that is highly sought after in regional markets.
During a Dissemination Seminar at the Limpopo Survey held in 2020, Zimbabwean exporters were told by a buyer from South Africa that their timber is the best in the region and that importers across SADC are looking for sustainable suppliers who can meet their demand.
Another example of the popularity of Zimbabwe’s timber is that a buyer from a leading chain in Botswana confessed to ZimTrade that their market is “actually addicted to Zimbabwean timber and other products.”
Apart from South Africa and Botswana, Zimbabwean timber produced in Manicaland has huge potential in other regional markets such as Mozambique, Democratic Republic of Congo, Angola, Namibia, and Zambia.
Export potential of Zimbabwean-grown timber
According to Trade Map, Zimbabwe’s exports of wood (sawn or chipped lengthwise) in 2020 were US$6,4 million, which was an increase of 18,5 percent from the US$5,4 million in 2019 .
The largest importer was Botswana which took US$5,1 million worth of products.
Other countries that imported Zimbabwe’s wood (sawn or chipped lengthwise) include South Africa (US$1,1 million) and Zambia (US$244 000). When we consider all products that fall under wood and articles of wood, Zimbabwe’s exports totalled US$15, 6 million and the largest importers were Botswana (US$5,5 million, Zambia US$3,9 million, South Africa US$3,2 million, and Mozambique US$2,9 million.
The growth of the timber industry is spurred by the increasing regional demand encouraged by a booming construction industry in developing southern African countries. This should then naturally lead to a growth in timber production in Zimbabwe.
Although there has been an increase in exports of locally-produced timber, current figures are insignificant when considering the high demand for Zimbabwean-grown timber.
Whilst there is need to deal with constraints affecting producers to boost these exports, there is also need to ensure that new players come into the sector and more hectarage is put under timber.
Furthermore, there is need to incentivise sector players so that they are cushioned against shocks in the economy as the industry normally requires long-term investments.
Value-add to earn more
Besides exporting timber as a product, value addition to produce furniture, boards and doors is required regionally.
Local businesses need to ensure that the majority of wood exports are value-added products and this can improve commodity demand in export markets.
Exporting the timber as value-added products would earn the country the much-needed foreign currency whilst creating jobs.
Local producers could consider producing collapsible modular designs that can be easily assembled at the final market or by the end-user at their home.
Here, the cost-per-unit in production and transportation is cheaper and this can make Zimbabwe-designed wood products highly competitive on the global market.
Currently, there are local producers who have diversified to include treated poles as well as bark extract on their product range.
Bark extract has a ready market in Asia for leather tanning.
Some small businesses that are producing for the local market have an opportunity to supply regional markets but they need technical and capacity building interventions.
This is particularly so in areas such as standardisation and meeting market requirements.
Zimbabwe’s location in southern Africa creates proximity advantages given the lower transport cost that can contribute to the competitiveness of locally produced timber.
Thus, local producers who want to tap into the emerging export markets for timber are encouraged to utilise the services offered by ZimTrade, particularly on market linkages and capacity development.
Allan Majuru is the ZimTrade chief executive.
Tinaye Agere
Online Reporter