The Sunday Mail
Trade Focus
Allan Majuru
As Zimbabwe gears up efforts to increase exports, international trade fairs and expos are important platforms for local companies to market products and services.
They provide direct engagement with potential clients, business partners and unlock export opportunities.
The recent Botswana Global Expo, where ZimTrade — the national trade development and promotion organisation — facilitated for the participation of 15 local businesses revealed opportunities that exporters should seize.
Local companies, drawn from sectors such as timber, wooden furniture, steel products, detergents, fresh farm produce, food chemicals, ceramics, clothing and leather participated at the Expo which was held from 6-9 August 2019.
Botswana is largely an open market economy, with the business environment being highly facilitative of trade and investment for both local and foreign players.
According to World Bank Ease of Doing Business Report (2019), Botswana is ranked 86 out of 190, which indicates favourable conditions for local businesses to trade with Botswana.
Botswana exports most of its locally produced products and has been able to record a trade surplus since 2016.
According to Trade Map, total exports in 2018 were US$6,57 billion against total imports of US$6,17 billion, creating a trade surplus.
Although recording surplus, Botswana is highly dependent on imports for most of its key requirements such as beverages, cereals, fresh produce and processed foods.
This situation provides a market for Zimbabwean products.
Botswana presents a ready market for Fast-Moving Consumer Goods such as dairy products, confectionaries, condiments and cordials.
Supplying directly to the retailers or through distributing partners, Zimbabwean companies have potential to export mainly processed foods such as pork products, tinned foods, cereals, milk and milk- based products, cordials, biscuits and sweets.
Botswana is also a net importer of fresh farm produce that local exporters have capacity to supply.
According to Trade Map, total imports of fresh farm produces were US$60,25 million in 2018, up from US$5481 million in 2017.
Produce such as vegetables, bananas, apples, oranges and pepper can perform well in the Botswana market and local exporters can earn more if they value add their commodities.
To supply the market, Botswana has an advanced retail sector in Africa which is dominated by Choppies and other South African Brands such as Shoprite, Spar, Pick n’ Pay, Woolworths.
Choppies provides an avenue for local exporters to supply Botswana retail sector. Currently, ZimTrade has engaged their local office for assistance to list Zimbabwean companies into Choppies outlets in Botswana.
Negotiations of some local companies to enter their outlets are already in progress and there is further scope to supply all Choppies in the southern African region.
Although South African companies will be a competitive challenge for local companies, there is potential to supply the retail sector in Botswana as all retailers source both directly from the manufactures as well as through distributors or agents.
Local exporters can also leverage on Zimbabwe’s global reputation of a producer of quality products as some local brands are already household brands in Botswana.
Batswana regard Zimbabwean products to be of great quality and some who interacted with locally produced products, at the expo, indicated willingness to “go Zimbabwe” if local players are able to supply.
Botswana also has a vibrant construction industry and the government has been active in the real estate sector where they have been constructing offices and housing units for public sector employees.
Current projects that local companies can tap into include construction of US$500 million-North West Transmission Grid Connection which started in 2018 and is expected to increase investment in energy related construction.
The project will involve construction of sub-stations and extension of the power grid.
Other construction activities are targeting improved housing, transport, water and energy infrastructure.
These present opportunities for companies directly involved in timber, steel products, building and construction materials as well as furniture industry for furnishing the buildings.
Building and construction supplies targeted for the consumer market is distributed through several retailers, which in most cases are indigenous companies such as Haskins and The Trade Group.
These retailers have experience in dealing with Zimbabwean manufacturers and can act as distribution channels that can take local products to all regions of Botswana.
Zimbabwean manufacturers can also set up their own distribution centres and take advantage of an array of incentives introduced by the government of Botswana.
For example, there is low general tax rate as resident companies pay company tax at 22 percent of the taxable income and the general rate of withholding tax is 7,5 percent on all dividends distributed.
In addition, subject to approval, manufacturing companies pay tax at 15 percent of taxable income and there are no foreign exchange controls in Botswana, hence free repatriation of profits, dividends and capital.
Further to supplying products to the construction sector, there is potential for Zimbabwean companies to supply services such as engineering and surveying.
Although agriculture contribute less than two percent to Botswana Gross Domestic Product (GDP), which according to World Bank was US$18,61 billion in 2018, livestock production, especially cattle, dominate the sector and contributes an estimated 80 percent to the agricultural GDP.
For local companies, there is need to develop the beef to leather value chain and process raw hides and skins into high quality leather.
As Botswana has no tanneries, finished leather has a high demand in the leather processing industry and Zimbabwe’s eight tanneries can produce enough products to satisfy demand.
There is also market for leather products such as handbags, belts and footwear.
The list of export opportunities to Botswana is endless and not limited to the sectors mentioned in this article.
Zimbabwean products are of good quality and this is the time for local companies to re-establish dominance in the Botswana market.
Allan Majuru is ZimTrade chief executive officer.
