via Exporting companies buckle under pressure – DailyNews Live by Kudzai Chawafambira 6 APRIL 2014
More than half of Zimbabwe’s exporting companies are facing stiff competition from Chinese and South African firms.
According to the latest local export manufacturing capacity survey by Zimtrade, 52 percent of local exporting firms are buckling under pressure from foreign companies, which receive various incentives and support from their governments to reduce the cost of exporting.
“The study revealed that, 34 percent of the firms have products facing stiff competition from products from South Africa, while 33 percent indicated that China is the source of imports competing with their products in the local market,” said the report.
South Africa is the single leading export destination for Zimbabwean manufactured products, with 70 percent of exporters citing the neighbouring country.
This comes as the country’s local manufacturing sector needs to re-orient trade facilitation regulators in order to ease bottlenecks that hinder enhancement of export competitiveness. In recent years, Zimbabwe has run systemic trade deficits due to declining exports.
Figures recently released by the Zimbabwe National Statistics Agency (Zimstat) showed that the trade deficit for 2013 widened to $4,19 billion from $3,6 billion in 2012 after the country imported goods worth $7,70 billion against exports of $3,51 billion. “Amendment of the laws is not sufficient, in addition to the amendment of laws regulating business, there is need re-orient many of the institutions that administer the various laws to transform them into pro-business facilitation entities,” said Zimtrade
The report noted that local exporting companies are facing hurdles with the country’s laws that are no longer serving the interests of the economy, citing clashes that occur among the police, Reserve Bank and Zimra among others.
Zimtrade recommended that industry needed to carry out value chain analyses to determine which industries can and should be revived and the sequencing of the same.
“The establishment of a working capital revolving fund for industry to fund export development and promotion activities will also provide opportunities to leverage matching grant funding support from Development Cooperation partners,” said the trade body. The country’s manufacturing sector remains in a crisis, with capacity utilisation plummeting to 39 percent from 44,2 percent in the year to September 2013.
According to CZI’s 2013 manufacturing sector report, the country’s industry continues to be depressed despite improvements in the macro-economic conditions.
The decline in industry performance comes at a time when the economy — which showed signs of improvement during the four-year coalition government, growing an average of seven percent between 2009 and 2012 — is deteriorating, with this year’s targeted gross domestic product growth already revised downwards from five percent to 3,4 percent.
ZimTrade’s mandate is to inculcate an export culture among business organisations and facilitate them to develop and expand into sustainable international trade.