tawandamusarurwa
Trade Focus
Allan Majuru
THE 36th Ordinary Session of the African Union (AU) Summit, recently held in Addis Ababa, Ethiopia, gave African leaders an opportunity to reflect on progress made in the implementation of the African Continental Free Trade Agreement (AfCFTA).
President Mnangagwa, who joined his counterparts in the deliberations, said African countries were urged to ratify the AfCFTA, which will ensure an increase in intra-Africa trade.
The President mentioned that African countries continue to spend millions in imports from other continents.
To address this, AU leaders agreed to strengthen regional value chains, which will benefit downstream and upstream industries, and reduce trade imbalances among African countries.
As businesses across the continent position themselves to benefit from AfCFTA, Zimbabwean enterprises must integrate regional value chains.
Participating in regional value chains is where the real deal is, as local companies will easily tap into opportunities presented by AfCFTA.
AfCFTA at a glance
AfCFTA is a continent-wide agreement aimed at transforming Africa’s economy by dismantling trade barriers, as well as deepening integration through improved infrastructure development, investment flows and enhanced competition.
AfCFTA will progressively eliminate tariffs on intra-African trade, making it easier for African businesses to trade within the continent. This means catering for and benefiting from the growing African market.
Further to this, the agreement seeks to undo an age-old trade arrangement where African countries trade more outside the continent than among themselves.
Currently, African countries export more raw materials while importing finished products.
This structure of trade has seen African countries exporting value, opportunities, jobs and infrastructure.
Thus, to address this, African leaders are seeking to strengthen and develop regional value chains so that countries improve their export offerings and retain value of their natural endowments.
To unlock full opportunities from continental economic integration, local companies must find a position where they contribute towards production processes of products and services that originate from the region.
The regional value chains being developed in several Southern African Development Community (SADC) member states — under the Support to Industrialisation and the Productive Sectors (SIPS) programme that presents opportunities for local industries — include agro-processing, pharmaceuticals and leather.
Leather value chain
The leather value chain is a low-hanging fruit given the country’s competitive advantage in livestock production and abundant wild animals for exotic leather, under controlled production.
Zimbabwe boasts good quality leather and the United Nations Conference on Trade and Development (UNCTAD) states that the country has more leather outputs compared to other nations in the region.
Thus, with its strategic position in the regional value chains, the leather sector has potential to set the country on a positive path towards sustainable economic growth, employment creation and poverty reduction.
Zimbabwe’s diverse selection of leather ranges from domesticated bovine to the African buffalo found on the wild escarpment.
Already, the country is earning sizeable income from exports of raw and processed leather, but there is potential to export much more.
UNCTAD states that Zimbabwe has potential to export products such as footwear, seats, trunks, suitcases, vanity cases, executive cases, briefcases, school satchels, spectacle cases and binocular cases.
Other leather products with potential for export from Zimbabwe are camera cases; musical instrument cases; gun cases, holsters and similar containers; travelling bags, insulated food/beverages bags and toile.
Although manufactured products offer best wins for the country, there are also opportunities for local companies to position themselves as processors of raw leather, getting supplies from countries such as Botswana.
The current tanners — who represent small-scale, medium-scale and large-scale players — produce wet blue and finished leather.
These tanners can supply countries in the region for processing products such as tanned or crust hides and skins of bovine and wild animals (exotic leather), and leather further prepared after tanning or crusting.
As a way forward, there is need to address constraints affecting producers of leather and leather products in Zimbabwe, so that they can effectively participate in regional value chains.
For example, the sector is dominated by small and medium enterprises and, therefore, there is a need for assistance in production techniques so that they can improve on quality, especially finishing and stitching.
Agro-processing value chain
Zimbabwe’s agriculture sector, which is the backbone of the economy, offers huge export opportunities.
This is because, when compared to other countries in southern Africa, Zimbabwe is better developed and positioned to offer requirements for states that are still growing their agricultural capacities.
One of Zimbabwe’s competitive advantages is production and supply of different seeds into regional markets, especially those that are growing their agriculture sector, for example, Malawi, the Democratic Republic of Congo (DRC), Tanzania and Namibia.
Processed foods
Relying on agricultural supplies from countries such as Zambia and South Africa, the country has potential to be a leading supplier of processed foods in the region.
Products that can be manufactured with supplies from countries in the region include confectioneries, cordials, cooking oil, snacks, long life milk, powdered milk, chips, tinned foods, processed meats and milk-based fruit juices.
As production is enhanced, local businesses have a huge potential to competitively supply processed foods to regional markets such as Zambia, Botswana, DRC and Malawi,
riding on bilateral and multilateral trade agreements.
Further to this, Zimbabwe is endowed with a conducive environment and climate for the growth of a niche set of wild fruits and traditional herbs that hardly grow in other parts of the world.
These include mauyu (baobab), masau (ziziphus mauritania), matohwe (azanza garckeana) and natural herbs such as zumbani (lippia javanica), muhacha (hissing tree) and moringa.
These wild fruits and herbs can go through value addition, packaging and branding to make it easy for exporters to earn more.
To tap into the regional value chain, Zimbabwean manufacturers need to upgrade technological and human skills to boost competitiveness.
Investment in key areas such as research and development will also make it easy for manufacturers to continuously improve in line with consumer tastes.
Pharmaceuticals value chain
Zimbabwe currently exports pharmaceutical products to regional markets and has potential to increase its market share.
Here, the strategic position for the country is in production, riding on research and developments that can be done in other SADC countries.
Under National Development Strategy 1, Government has committed itself to increasing the number of locally produced essential medicines and increasing the proportion of companies complying with the World Health Organisation requirements, as well as reducing the medicines import bill.
Increased production, coupled with more players in the pharmaceutical sector complying with international standards, is going to improve the sector’s competitiveness, which, in turn, will make it easy for locally manufactured products to perform in regional markets.
Apart from potential in the production of pills, there are opportunities for local companies to position themselves as leading producers of personal protective equipment, mosquito nets and medical equipment.
Allan Majuru is the ZimTrade chief executive officer.
Online Reporter