ZIMBABWE has over the last two decades become increasingly dependent on export earnings to meet a significant portion of critical requirements that include fuel, electricity, medicines, drugs and basic commodities that include maize and cooking oil. This comes after the country went through sustained economic downturn, which has decimated production and productivity across key sectors such as agriculture and manufacturing, making it inevitable that the country relies on imports for its daily needs.
Critical to maintaining the balance between the country’s key requirements and the requisite financial resources is growth of exports to generate foreign currency, which currently is acutely inadequate for such. While both exports and imports from and to Zimbabwe, respectively fell in 2019, imports remain higher than exports, leaving a gap that causes intermittent failure to pay for imports.
The yawning gap between the country’s appetite for foreign currency, barring challenges caused by leakages and perceived issues around inefficient allocation, explains shortages being experienced in terms supply of essentials such as electricity, fuel, medicines, drugs and even maize.
This scenario makes the role of ZimTrade, a State-created trade promotion agency whose mandate includes promotion of exports from Zimbabwe and growth of businesses that have a bias towards the export markets to generate forex, more so now that Zimbabwe has virtually no access to external lines of credit, which has made efforts by Government to stabilise the economy, reignite recovery and sustain growth, difficult.
The key question is what should be done for the country to achieve appropriate export status? Our business reporter Panashe Chikonyora (PC) recently met up with national trade promotion body, ZimTrade chief executive officer Allan Majuru (AM) to discuss this issue and more.
PC: To start with, what challenges are you currently facing as a trade and export promotion body?
AM: We face the very same challenges that exist for our exporters, as a conduit to the exporting fraternity if our clients are facing challenges; by association those challenges automatically affect us. Some of the challenges have to do with the regulatory environment, which some exporters say does not promote the ease of doing business.
However, the encouraging thing is that we are working with Government agencies to ensure that issues raised under the Rapid Results Initiative and other impediments that affect exports growth are addressed.
PC: Zimbabwe’s National Export Strategy has a target of 10 percent growth per year. What are you doing to realise that target?
AM: We are focusing on key sectors earmarked for growth and we have put in place a three level support that will ensure exporters are competitive on the export market. Priority sectors identified by the National Export Strategy include Horticulture; Cotton to Clothing Value Chain Sector; Arts and Crafts; Pharmaceuticals; Leather and Leather Products; Iron and Steel; Wood and Furniture; and Fertiliser and Chemicals.
For the services industry, priority sectors include Tourism Services; Transport Services; Education Services; Medical Services; Business Services; Information, Communication Technology; Energy- Related Services; Construction and Engineering Services; Financial Services; and Events and Meetings Industry. Currently, we are developing players in the sectors to be export ready, while at the same time providing them with relevant and up to date market information and intelligence so that they produce from market-in approach. Thirdly, we are supporting support developed sectors with market access and in market promotion by identifying buyers and exhibitions where they can get exposure and find off-takers for their products.
PC: What key initiatives have been put in place to drive exports in new markets?
AM: ZimTrade has in its 2020 to 2023 strategy identified seven regional markets, where participation in export promotion activities will be increased, as well as conduct innovative in-market promotional activities in conjunction with our embassies. These markets are Zambia, Mozambique, Botswana, Malawi, DRC Namibia, and Angola.
They have been determined partly in response to the national and regional focus on regional integration. The establishment and subsequent ratification of the African Continental Free Trade Area (AfCFTA), as well as the earlier founded Tripartite Free Trade Area (TFTA) has shown that there is scope for increased intra-Africa trade with a potential of over US$50 billion over a 20-year period.
We have also identified new markets outside Africa, which include Dubai, China and Japan. Dubai is a strategic market that will offer access to the entire United Arab Emirates, especially for horticultural produces. As the Ministry of Foreign Affairs and International Trade is looking to strengthen economic cooperation, Zimbabwe’s missions abroad will assist in connecting local businesses with foreign markets.
We will also conduct market surveys to identify potential customers and buyers for local products in those new markets.
PC: What are some of the major highlights in the past year that indicate progress on driving Zimbabwe’s exports?
AM: As part of our service to the exporting community, last year we conducted market surveys in Zambia, Malawi, Namibia and Southern Angola where we identified Zimbabwean products with opportunities in those markets. We also identified buyers who will make it easy for Zimbabwean products to sale in those markets.
We had a lot of interest from buyers in these markets and two local companies made their initial exports to two markets and are looking at increasing their volumes.
We will be hosting seven buyers from these markets at our Dissemination Seminar in Harare and Bulawayo on the 13th and 14th of February in Harare and Bulawayo respectively. We expect local companies to clinch export deals at that seminar.
We also conducted a number of capacity building programmes, working with local and international development cooperation partners. The idea is to create competitive brands that can easily sell in foreign markets. Much of the support went into horticulture sector as this is a low hanging fruit for the country, as well as leather and leather products, crafts and arts and building and construction sectors.
We have an MoU with Netherlands-based PUM and SES of Germany where experts from these countries come to Zimbabwe to assist local companies on areas such as quality and production efficiencies. We also worked with Europe-Africa-Caribbean-Pacific Liaison Committee (COLEACP) to assist horticultural producers and exporters to implement good agricultural practices such as global gap and other private standards, sustainable environmental management practices as well as facilitate access to finance, among other things.
As part of the development initiatives, we had a business visit to the Netherlands with our three model farms where agreements on the export of sweet potatoes were done and this will be new incremental exports from the model farms.
Our Export development initiative saw two new companies export for the first time one in the Sauce and condiments sector and the other in breakfast cereals and healthy foods.
With regards to promotion of exports, we took part in international exhibitions in Zambia, DRC, Botswana, China, Japan and Dubai where local companies recorded good orders and enquires, of which some are reporting repeat business. Given United Kingdom’s exit from European Union, we conducted an outward seller mission UK so that local companies can maximise on opening up of space in UK.
PC: What are some of the emerging export markets for Zimbabwean products and the current opportunities?
AM: As I indicated earlier on, the emerging markets where we are placing emphasis include SADC, African Union and COMESA Member States, Europe and Middle East. For the region, focus is on Zambia, Mozambique, Botswana, Malawi, DRC, Namibia, and Angola. With regards to current opportunities, we have enquiries of Arts n Craft from Germany and SA which we are pursuing.
The ongoing Fruit Logistical in Germany is a huge opportunity for Zimbabwe to export organic pineapples, passion fruit, fine beans, chillies and mange tout beans to Germany and other Euro-Asia states in the Schengen Region.
Horticulture demand in Asia is growing especially macadamia nuts and citrus fruits. Fresh produce and stone fruits demand in the Middle East is also growing and the Dubai 2020 will be an opportunity to position ourselves to increase exports to that market. Processed foods demand is growing in the SADC region, specifically in confectionery, tinned foods and sugar and beverages.
PC: Regarding regional markets, indications are that Zimbabwe has not fully utilized its relations and proximity to countries to grow exports. What is your comment and what needs to be done?
AM: Indeed, Zimbabwe is not fully utilising the regional relations given the good political relations between Zimbabwe and SADC and COMESA countries. However, we have commenced work to promote exports, particularly from SMEs who can take advantage of bilateral and multilateral trade agreements between Zimbabwe and countries in the region.
There is need for local companies to be assisted to take part in sales promotion in regional markets, for example, having three products from Zimbabwe being part of the ShopRite in-store promotion or SPAR Botswana promotion.
We are also working to increase our routes to those markets by opening more distribution channels.
There are also plans to work with local fast-food franchises and local supermarkets brands so that they open shop in the region. To achieve this, there is need for Government of Zimbabwe to incentivise and encourage real estate developers to build malls in neighbouring countries that can accommodate local brands.
PC: What do you think Zimbabwean exporters should do to successfully penetrate regional markets?
AM: Further, to some of the solutions I shared in the previous questions, I am convinced that a committed and passionate approach to cementing local brands in the region is critical. Look at what Food Lovers, Delight cooking oil, CB mayonnaise are doing.
Our local companies must develop robust export marketing plans that have precise brand loyalty building initiatives in those markets. They must understand that marketing is not an expense but an investment. There is need for the private sector to establish and operate warehouses in the regional markets.
This way, they will ensure there is no time lost between transportation and selling. Manufacturers, exporters and constructors must work together in constructing storage facilities outside our borders.
PC: With regards to horticultural produce, have you put in place activities to fully harness the potential provided by the sector in growing exports, seeing that you recently signed an MoU with PUM?
AM: The best model farms are one of our major activities to grow exports in this sector.
The projects seek to on-board many small scale farmers as out-growers and ultimately increase our horticulture output and piggyback on the experience of established exporters, the best model farms, that are adequately certified and are compliant to EU standards.
The TradeCommII programme that just ended set the tone for compliance issues for small scale farmers on seven targeted value chains that have export potential in the EU market.
Activities with COLEACP will also make sure that local farmers implement good agricultural practices such as global gap and other private standards.
The TradeCommII programme also outlines the requirements for baselines to be set in compliance issues. Key stakeholders in the Plant Quarantine Services, SPS, HDC, Ministry of Health and Ministry of Agriculture were part of this initiative to move more towards a compliance system to ensure we meet global standard requirements.
PC: Last but not least, how do you see 2020 panning out, what is your assessment of the outlook for the year, plans for promoting and exports from Zimbabwe?
AM: We were on a positive trajectory on exports although the previous year we experienced some challenges such as power and fuel shortages. If all stakeholders and sectors players can focus on what needs to be done to grow exports, 2020 can bring significant growth.
The demand pattern is promising. Our currency issues have created a need for companies to export and generate foreign currency. The mono-currency has also made our products competitive on the foreign market, unlike previously when USD made our products more expensive.