The Sunday Mail
A FEW years ago, the export business was seen as a “big boys’ game”, which established companies only could successfully venture into.
Trade Focus
Allan Majuru
Thanks to concerted efforts by the Government and related institutions, medium and small-scale businesses are increasingly penetrating export markets.
The Second Republic’s economic diplomacy has resulted in increased participation by local companies at international business forums to strengthen business-to-business engagements.
In addition, activities by ZimTrade — the national trade development and promotion organisation — have also resulted in heightened interest among previously marginalised groups to venture into the mainstream export business.
For example, ZimTrade’s Eagles’ Nest Youth Export Incubation Programme has seen more than 150 youth-owned enterprises receive capacity-building interventions in the last two years so that their products and services can compete well in export markets.
The Next She Exporter Programme by ZimTrade has also improved integration of female-led enterprises, especially small and medium enterprises, in the mainstream export business.
Export process at a glance
While the process of exporting can be intimidating and time-consuming to new players, it is easier than most people think.
The process of exporting begins even before a company decides to start production.
Early processes include conducting market research to identify opportunities; analysing import trends in target markets; attending trade fairs, conferences and business seminars in target markets; and organising meetings with potential buyers.
Information gathered during these processes should be used to come up with an export marketing strategy that will give direction to the company’s export business.
The strategy should clearly define markets being targeted in terms of geographical area and segment; market entry strategies as informed by research; market dynamics; pricing; delivery channels; and the route to market.
The route to market is important as it defines how the company intends to export its products.
For example, exports can be taken to the market through a distributor, agent, franchise or e-commerce.
The strategy should also identify the department that will be responsible for exports and set aside a budget to support the initiative.
Targeting low-hanging markets
The easiest way to kick-start an export journey is targeting countries in the region and those Zimbabwe has trade agreements with. Zimbabwe is a signatory to both bilateral and multilateral trade agreements.
These agreements offer quota-free access to their markets at reduced or no tariffs on selected products.
Locally produced products qualify for preferential treatment under the SADC Protocol on Trade, COMESA Free Trade Agreement, Interim Economic Partnership Agreement, UK-ESA Interim Economic Partnership Agreement and the African Continental Free Trade Area. Zimbabwe also has operational bilateral agreements with Mozambique, Botswana, Malawi and Namibia.
Conducting market research
Before venturing into any export market, it is important to begin by conducting a market research. It can be either desk research or field research, or a combination of both.
This will enable the potential exporter to understand several factors that can determine success or failure.
During this research, there are issues that should come out clearly, such as market size, quantities, value of sales and current imports of the product or service in the targeted market. Before selecting a market, exporters should also understand exchange controls of respective countries, as this will determine how one is paid.
It is also critical to look at macroeconomic indicators of the intended export market.
Customs duty and value-added tax are some of the issues that research should answer, as these will impact on final pricing.
Further, culture and age demographics in the targeted market are important to ascertain consumption habits.
Local exporters need to have a comprehensive understanding of these features so that they develop products and services that meet customer needs.
Understanding market requirements
The exporter should also be aware of tariff and non-tariff barriers, including surcharges on the product under consideration.
Overlooking these may result in penalties and, in some cases, confiscation of products.
Some products are regulated by health authorities. There are efforts to standardise some of these regulations in the region so that if a product is registered locally, it will also be easier to register in regional markets after conducting relevant tests.
Export markets are particular about packaging and labelling requirements, and it is of paramount importance to check these.
There is also need to consider distribution options, as this is also affected by proximity and nature of product to be transported.
Would-be exporters should also check on trends in the use of the product targeted for export. There is nothing that puts off a potential buyer more than negotiating with a supplier who does not have enough knowledge about the product, pricing or delivery times.
Meeting orders and documentation
A successful export marketing expedition should result in the company getting orders for its products or services.
A standard confirmed order should include product description, quantity, price, payment terms and delivery times acknowledged by the supplier.
Upon confirmation of an order, the company should start preparing for delivery according to agreed terms.
The firm should prepare a commercial invoice and packing list, which should show the consignor (exporter) and consignee (importer) details, as well as the product description, price, payment terms, packaging, exit port, freight and insurance costs.
Description of the product must be identifiable on the Harmonised System (HS) codes to avoid delays in clearance or being fined for wrong classification of products in the receiving market.
The HS code is a standardised numerical method of classifying products used by customs authorities around the world to identify products when assessing duties, taxes and statistics. Not describing the product properly can attract fines by clearing authorities for wrong classification and may delay shipments.
Once a commercial invoice has been prepared, the supplier should proceed to apply for required export permits and certificates from relevant authorities.
For example, all agricultural produce requires one to be registered with the Agricultural Marketing Authority as an exporter.
As a general guide, all fresh produce requires a phytosanitary certificate and an export permit when exporting from Zimbabwe.
The next stage in the export process is to apply for an exchange control approval, popularly known as the CD1 form.
A company should be registered as an exporter with the Reserve Bank of Zimbabwe (RBZ) and have an operational business partner number from the Zimbabwe Revenue Authority (Zimra).
Registration is done through the supplier’s bank, which submits the application on behalf of its clients.
Similarly, when applying for the CD1, an application, together with copies of the export documents, is submitted to the bank, which processes the CD1 form on behalf of RBZ.
When issued with the CD1 form, suppliers should take all documents mentioned above and submit them to Zimra — usually through the clearing agent — for export clearance.
After one’s shipment has been cleared by Zimra, an exporter has 30 days to ship the consignment, failure of which the supplier is required to cancel the clearance or show proof of why the consignment has been delayed.
When the product has been shipped out, the exporter now has the responsibility to acquit the CD1 form by showing proof that the consignment has been paid for within 90 days from the date the CD1 form was issued for all other products and 30 days for horticultural products. This is done by furnishing the bank with proof of payment that will be matched with the bill of entry.
Allan Majuru is ZimTrade’s CEO.
