The Sunday Mail
Head of delegation of the US trade delegation Mr Phillip De Leon(right), flanked by Price Waterhouse Coopers managing partner Mr Tinashe Rwodzi, fields questions in Harare recently
>> Zim exports to US top US$65m in 2014
>> Trend continues in new year
Darlington Musarurwa – Business Editor
AMERICAN companies, the bulk of which have become increasingly smitten by local business investment opportunities, continue to be burdened by the Zimbabwe Democracy and Economic Recovery Act (Zidera) – a law passed by the George Bush administration in the US in 2001 – which makes ease of trade between Harare and Washington difficult.
A visiting business delegation from the United States of America, which was led by a representative of the Corporate Council on Africa Mr Phillip De Leon, concluded, after a recent three-day mission, that the country has “extraordinary potential”, particularly in agriculture.
A follow up trade mission is expected in July.
“My assessment based on the days we have spent here is that Zimbabwe is open to business. There are business opportunities everywhere so now the real work starts. We need to do follow ups. My perception at this stage is very positive . . .
“You have an extraordinary potential in agriculture and we need to wake up the lion. My goal is to see how we can further develop agriculture,” he said.
“We agreed different things at different levels and one of my colleagues will come back in July,” Mr De Leon told a press conference on June 6.
Mr Tinashe Rwodzi, a managing partner with Price Waterhouse Coopers, noted that the re-engagement of the US and Zimbabwe was important inasfar as it promotes foreign direct investment.
“This is ground breaking for the Zimbabwe business forum since we have managed to convince the US to invest in Zimbabwe. We always insist on the touch-feel policy, where we say to foreign investors come to Zimbabwe and experience rather than basing on what is written in the newspapers; thus, they have come, touched, felt and have been impressed by what they saw,” he said.
Through Zidera, the US sanctioned 69 companies and 106 via the Specially Designated Nationals system.
The Zimbabwe Mining Development Corporation (ZMDC), the Minerals Marketing Corporation of Zimbabwe (MMCZ), BancABC, Bindura Nickel Corporation (BNC) and the Industrial Development Corporation (IDC) and little-known Samrec Vermulite Mines were some of the companies that were blacklisted.
And the American Office of Foreign Assets Control (Ofac) has been systematically seizing money from local entities.
Ofac infamously seized a US$2,1 million loan facility from PTA Bank to Olivine, a local fast-moving consumer goods manufacturer, in April 2013.
But the renewed interest in local assets by American companies follows the country’s successful transition last year from being a net importer to a net exporter on trade with the US.
Statistics from the United States Census Bureau show that the country shipped more than US$64,9 million worth of goods to America in 2014, while goods more than US$49 million were imported from the North American states.
A positive trade balance of US$16,2 million in the review period was therefore recorded. In the preceding year, Zimbabwe had only managed to export goods valued at US$13,9 million, while taking in goods worth US$60,5 million, yielding a trade deficit of US$47 million.
Growth has continued this year with shipments to America climbing to US$23 million in the first four months of the year (January – April) against imports of US$9,5 million.
There are expectations that as trade between the countries begin to grow, Washington might be forced to review its intractible position on sanctions.
America seems to be spooked by the growing influence of China on the continent. Chinese government official statistics show that bilateral trade between Beijing and Harare rose 12,7 percent to US$1,2 billion from US$1,1 billion in 2013.
Most importantly, Zimbabwe’s exports to China increased to US$840 million, which is 13 times more the size of goods the country exported to America.
America has naturally been on a charm offensive. In August last year, it convened the US-Africa Leaders Summit in order to try and promote trade relations.
It is estimated that during the summit, new deals worth US$14 billion in areas like clean energy, aviation, banking and construction were signed between various African nations and US multinationals.
The US government also committed to providing US$7 billion in new financing to promote trade and investment with the continent. Zimbabwe was however excluded. It has become a familiar pattern of US trade policy towards the country.
In 2000, the country was sidelined from the African Growth and Opportunities Act (AGOA), which was approved by the US Congress in May 2000 to encourage multi-billion dollar companies to invest in Africa. It also gave 39 African countries preferential access to the American market.
About 6 000-odd products were allowed duty-free access.
Experts say the benefits of AGOA to African countries has been marginal.
Noticeable gains have only been recorded in oil, textiles, manufacturing and artefacts.
Furthermore, it is believed that trade with America through the facility has only been enjoyed by three countries – Nigeria, South Africa and Angola.
In 2011, for example, of the US$79 billion worth of goods exported to the US, 80 percent were from Nigeria (47 percent), Angola (19 percent) and South Africa (13 percent).
AGOA has since been renewed again this year.
While the US government seems to be sidelining Zimbabwe, its private sector continues to persistently enquire about local business opportunities.
Excerpts from a letter written by American charge d’ Affaires Mr David W. Bell in September 2012 to an unnamed American company read:
“Over the past two years, the US Embassy has received a spike in expressions of interest from American firms to establish business linkages with Zimbabwe. Given the country’s impressive resource base – both human and material – we believe that Zimbabwean economic recovery offers significant potential for lucrative trade, joint venture and investment opportunities for American business in a variety of sectors . . .
“The current economic recovery, however, provides widespread opportunities for American exports and joint ventures as companies restructure and recapitalise their physical plant. . .
“Opportunities abound for US business engagements, sales, distribution arrangements, and investments in Zimbabwe.”
It also encouraged firms to visit the country to explore various business opportunities. Added the letter: “Business leaders from across the globe are increasingly focusing on the largely untapped investment opportunities available in Zimbabwe.
“I strongly encourage the company to visit Zimbabwe and see the opportunities to yourself. Do your research and develop contacts now to make an informed decision on when and how your firm and Zimbabwean partners can work together for mutual benefit.”
