The Sunday Mail
Trade Focus
Allan Majuru
THE message is clear across the world regarding the future of trade.
Although some countries are experiencing a second wave of the coronavirus (Covid-19), there have been calls for the need to learn to live with the pandemic.
This new approach to the pandemic will largely see reduced disturbances to businesses in 2021 when compared to the first global wave of February-March 2020.
In fact, most countries seem to be avoiding the route of complete shutdowns, which would see only essential services operating.
For example, South Africa, which is Zimbabwe’s largest trading partner, recently announced that some of the adjusted measures to curtail Covid-19 “will keep the economy open while strengthening measures to reduce transmission”.
The new lockdown measures in South Africa will see reduced business times for large importing businesses such as restaurants while most businesses will continue to operate as long as they adhere to all relevant health protocols and social distancing measures.
So, what does all this mean for Zimbabwean companies as 2021 roars into life?
The year 2021 will be an exciting one as indications are that most countries are keen on maintaining trade, which should translate to sustained opportunities for Zimbabwean enterprises.
This means local companies “should not come to the party late”.
For the better part of 2020, most companies around the world were fighting to keep their heads above the water as Covid-19 disrupted the conventional ways of doing business.
However, the year 2021 will focus on local companies regaining lost markets as well as improving capacities and competitiveness.
This improved market penetration will be achieved by coming up with strategies that seek to maximise on opportunities that have been created by Covid-19.
There is also a need to acknowledge that some markets will likely continue imposing strict Covid-19 measures, which will require a “business unusual” approach for companies that are keen to continue exporting.
Such business unusual approaches should include diversifying export products and markets as well as improving on value addition.
Riding on existing national instruments will be a major enabler for companies that seek to unlock new opportunities, with better support from the Government.
Leveraging on NDS1
to improve exports
Strengthened linkages between private and public sector in 2021 will help forge a stronger front on the export arena.
Here, local businesses will need to take advantage of the National Development Strategy 1, launched by President Mnangagwa in November 2020, to unlock further export opportunities.
The blueprint for Zimbabwe’s economic growth, NDS1, which will run from 2021 to 2025 seeks to achieve sustainable economic growth towards an upper middle income economy by 2030.
Considering the contribution of primary commodities to national exports, the Government has indicated that it will focus on value addition and beneficiation.
This is expected to “transform Zimbabwe’s economic structure from one highly dependent on the export of minerals and agricultural raw materials to an economy trading high value processed goods”.
For businesses that can plan ahead, the focus of NDS1 shows that investment will be concentrated on sectors that value-add national resources.
Ensuring that a large part of the business is focusing on value-addition will help local businesses to attract better investment.
Value addition will also allow local companies to earn more on export markets, whilst at the same time creating employment for the nation’s young people.
The 2021 target set for the manufacturing sector’s contribution to national exports under NDS1 is US$839,9, representing 16,9 percent of total exports.
Currently, available data shows that manufactured exports for the period January-September 2020 stood at US$335,6 million, according to the Zimbabwe National Statistics Agency (ZimStat).
These targets set under NDS1 can be achieved by a concerted effort of private sector and Government agencies working “smart” towards the global export goals.
The NDS1 also looks at growth of exports of services from the 2019 figure of US$444 million, according to Trade Map, to US$565 million in 2021, reaching US$826 Million by 2025.
Key to growth of service exports is identifying a roadmap to how we can grow this sector.
Efforts to carry out a sector mapping exercise is already underway with the assistance of strategic stakeholders and development co-operation partners.
The other focus of NDS1 is reducing the trade deficit by coming up with “interventions that increase production and productivity across all sectors as well as import substitution strategies”.
To achieve this, local companies this year will need to first source raw materials in the local market, which will reduce the demand for foreign currency.
The success of import substitution will be anchored on improved and increased collaborations between players along value chains.
As the year 2021 progresses, players along and across value chains will need to organise themselves and implement activities that will improve the production and distribution of raw materials.
Once there is better coordination at sector level and improved production, export promotion and market diversification activities will be implemented by ZimTrade — the national trade development and promotion organisation — and other partner institutions.
Regarding an enabling business environment, this year will focus on improving the ease of doing business in line with Government’s Ease of Doing Export Business Reforms so as to enhance export competitiveness.
They are a lot of processes and regulations that need to be streamlined to assist existing and potential exporters to gain market entry.
ZimTrade will continue working with the private sector to identify impediments to doing export business and engage Government and related agencies to address statutory impediments identified under the Rapid Results Initiative (RRI), especially those related to export regulations, processes and procedures.
Already, NDS1 has identified the urgent need to simplify exporting and importing procedures as well as eliminate customs delays and improving customs administration.
Thus, as the year progresses, there should be some changes that will see exporting business spending less times in queues but rather spending more time meeting orders from export markets.
The NDS1 successful implementation will also position Zimbabwe to take advantage of the African Continental Free Trade Area (AfCFTA) whose free trading commences in January 2021.
The ability for local companies to leverage on areas where the country enjoys competitive advantage will provide opportunities to export those goods and services where there are better chances of doing well.
Facilitating growth in exports of goods and services.
The further implementation of the National Export Strategy (2019-2023) this year will focus on diversification of value-added products and services as well as improving access to markets.
Specific strategies will be developed and implemented for the key sectors identified by the National Export Strategy (NES) as being low hanging fruits by having comparative advantage and export potential.
For export products, the sectors that will be prioritised for export development and export promotion include horticulture, cotton to clothing value chain, arts and crafts, pharmaceutical, leather and leather products, iron and steel, wood and furniture, and fertilisers and chemicals.
Priority services sectors this year will be tourism, transport, education, medical, business services, information and communication technologies, construction and engineering, finance, events and meeting, and energy related services.
With regards to export promotion for the priority sectors, activities planned for this year will be a hybrid of physical and virtual events.
Currently, there are markets and event organisers that have indicated that they will host trade promotion and exhibition events under strict Covid-19 regulations.
For example, organisers of the Intra-African Trade Fair have indicated that they will host this year’s continent-wide trade event in Rwanda.
Participation at such an event will make it easy for local companies to tap into the booming African market and ride on the opportunities created by the AfCFTA.
ZimTrade will facilitate the participation of local companies at the event in Rwanda and in other high-impact events, especially those taking place in regional countries such as Zambia, DRC, Botswana, Mozambique, Malawi and Namibia to foster intra-African trade.
Activities that attract few individuals but with high results such as inward buyer missions and outward seller missions have also been planned to improve the interface between local companies and international buyers.
For countries that will not be hosting physical events in 2021, ZimTrade will facilitate the participation of local companies in virtual trade fairs and business meetings, which are gaining popularity across the world.
The major advantage of these virtual meetings is that they cost less and can be attended by participants from any part of the world if they have internet connectivity.
Virtual events will also allow local companies to access difficult-to-reach markets, especially those that have imposed travel restrictions but are importing goods and services.
With regards to capacity development programmes, interventions will continue taking place in line with Covid-19 regulations.
Some activities will be implemented in-person whilst some will be completed through virtual forms.
For activities that have previously depended on interventions by international experts such as Netherlands-based PUM technical experts, the continuation of programmes will be dependent on international travel guidelines.
Efforts to continue developing new exporters especially in youth and women owned businesses will be accelerated in 2021 with programs such as the Eagles Nest, Food for Export Masterclass (FEM) and export awareness seminars being held throughout the year.
Capacity building programmes under the Eagles Nest Youth Export Incubation programme, which started last year, will continue this year, with a focus to have some of the participating youth-led businesses export ready before end of 2021.
The youth-focused programme is expected to nurture youth led SME’s into export ready companies through various interventions that are aimed at improving the competitiveness of youth owned enterprises and developing linkages to local and international markets.
Capacity building interventions will also continue for the FEM programme being implemented by ZimTrade, together with the Netherlands Embassy in Harare, Zimbabwe Agricultural Development Trust, Hivos and PUM.
The programme is designed to build capacity of 20 female entrepreneurs in various aspects of horticulture, dairy production, food processing, and food export business, targeting to transform them into successful exporters using the latest production and business methods. The Best Model Farms and Provincial Export Cluster development initiatives are programmed to feed into the transformative and inclusive growth that benefits all Zimbabweans.
These programs seek to achieve inclusion of all provinces and small-scale producers into the mainstream exports business.
However, measures have been put in place to ensure that some local technical experts assist with training programmes to ensure there is continued support to local businesses.
Allan Majuru is ZimTrade chief executive.
