Devolution crucial for exports

13 Sep, 2020 - 00:09 0 Views
Devolution crucial for exports

The Sunday Mail

Trade Focus Allan Majuru
EVERY province in Zimbabwe is unique and endowed with resources that can support the development of products with potential to compete on the export market.

Lately, discussions have centred on implementation of devolution with speed, however, the conversations should focus on how to develop products and services that are unique to each province.

Undoubtedly, the devolution exercise will see provinces and districts becoming national hubs for production and export of unique products and services.

This approach is not new to Zimbabwe as it has worked in countries like Ghana where even districts are expected to play an important role in national economic development.

The cascading of responsibilities from national to district level in Ghana is regarded as one of the reasons behind the growth of its exports, from US$1,71 billion in 2001 to US$17,1 billion in 2018.

A paper published by Zimbabwe Economic Policy Analysis and Research Unit (ZEPARU) early this year highlights the importance of devolution, particularly on value addition and beneficiation, which are crucial cogs in ensuring the country realises more earnings from its exports.

Further to increasing export earnings, ZEPARU argues that devolution will guarantee job creation as well as improved livelihoods at district level.

“The Devolution concept in Zimbabwe embraces value addition and beneficiation of resources found in each district as opposed to exporting them in their primary form.

“Instead of them being moved to cities and towns for further processing, value addition is expected to occur at source thereby benefiting the communities where these resources are being produced or extracted,” read the ZEPARU paper.

With support from all stakeholders, the development of these products and services should leverage resources within the provinces.

Although this column has previously profiled some opportunities in all provinces, emphasis should be placed on development of export clusters that will promote a participatory approach by businesses of all sizes.

As agriculture is one of the low hanging fruits for Zimbabwe’s exports, development of export clusters in provinces such as Manicaland and Masvingo should be one of the early focus areas once governance has been decentralised.

But what are some of the unique offerings from these provinces?

Manicaland
This dynamic region produces fresh vegetables for domestic and international consumption. It also produces herbs, baobab products and capsicum products like paprika and chillies.

Products which are exported by the region include flowers, citrus, mangoes, cotton, pineapples, sweet potatoes, honey and sugar beans.  Macadamia, predominantly exported from Chipinge, Honde and Nyanga districts, is exported to China, South Africa, Thailand, Malawi and Hong Kong. Last year, according to Trade Map, Macadamia accounted for about US$21 million worth of exports, which all came from the eastern region.

The four main companies involved in avocado exports are all resident in the eastern region.

Manicaland exports US$1,1 million worth of bananas, mostly to South Africa. The bananas are mainly produced in Chiredzi, Chipinge and Vumba.

The table bananas exported by Zimbabwe are tastier than those from our competitors in the regional markets. Some of the bananas are exported to Zambia.

To harness the potential in horticulture, the development of clusters in Manicaland should place emphasis on value addition so that farmers can earn more in export markets.

For example, by value adding the bananas into powder and chips the region can improve its contribution to the fiscus.

Timber grows well in the Eastern Highlands and the exotic plantations constitute the greatest proportion of timber exports by the country. These are exported as poles used for electrification as well as fencing and construction timber. Wood, articles of wood and wood charcoal accounted for US$19,4 million, predominantly to Zambia, Botswana, Mozambique and South Africa, according to Trade Map.

Manicaland has potential to surpass US$50 million worth of tea and coffee exports. Currently, Zimbabwe’s exports of tea and coffee are valued at around US$22 million and US$2 million respectively, according to Trade Map.

Key export destinations of tea from the country include South Africa, United States of America, United Kingdom, Russia and Germany. Zimbabwean coffee has been exported to countries like Germany, France, Italy and Japan.

The Tamuka MuZimbabwe brand is a prime coffee brand that is sold in Sweden by Nepresso. This coffee is predominantly produced by smallholder farmers whose quality has attracted the established coffee blender.

The province should take advantage of popular tea brands like Tanganda, Quickbrew and Three Leaves to increase exports from Manicaland.

Cluster development in the Eastern Highlands should accommodate outgrowers so that they can help increase production of the various commodities.

Established companies like Tanganda, Ariston and Tongaat Hulett have thriving outgrower schemes that have boosted their exports as well as those of their respective provinces.

Besides its horticultural potential, Mutare’s proximity (about 300km by road) to Beira, provides opportunities for increasing Zimbabwe’s exports. In 2019, according to Trade Map, Zimbabwe’s exports to Mozambique amounted to US$354,3 million against imports of US$90 million.

The exports consisted of US$94 million worth of processed foods, building and construction for US$48,5 million, and agricultural inputs and implements worth US$23,6 million.

Zimbabwe’s exports of value-added goods to Mozambique were dominated by sugar and its confectioneries, tea and coffee, paper and packaging as well as timber.

Considering the good political relations between Mozambique and Zimbabwe, Manicaland province will help foster trade relations between the two nations and help improve Zimbabwe’s exports to Mozambique and beyond.

Both Zimbabwe and Mozambique are signatories to the Southern Africa Development Community (SADC) Trade Protocol, which stimulates and encourages trade by giving one another preferential treatment in the reduction or elimination of custom duties.

Masvingo
When developing clusters, Masvingo will consider existing potential in sugarcane and livestock production, which are some of the key sectors supporting economic growth in the province.

About US$90 million worth of sugar is exported by Zimbabwe mainly coming from Masvingo region. The main destination markets include Kenya, Botswana, United States of America, Spain and South Africa. Masvingo province has the largest livestock population in Zimbabwe and can reignite meat exports. The province can help rebuild the meat value chain and meat exports can start flowing to Europe where Zimbabwe meat products were well sought-after.

The Lucerne project in Chiredzi will help draw synergies with the large herd of cattle that the province has. The large cattle herd, coupled with the lucrative exotic skins from crocodiles, makes Masvingo a focal point for hides and skins.

Masvingo province has potential for the production of citrus in the Lowveld. By making use of the huge water bodies especially Tugwi Mukosi, the province can irrigate plantations in Mwenezi, Chiredzi and Triangle effectively boosting productivity in this region.

The hot weather conditions in most of the province is an aid to production of high “ester” content in Capsicums. Masvingo produces garlic and ginger, key to maintaining a healthy life.

Farmers in and around Gutu have been producing the crops, which if they consolidate, the commodities can be exported to regional markets.

The eastern region has immense potential to increase exports from the country as it also comes with downstream benefits on the processed foods sector that derives its inputs from Manicaland.

Investment of standards like Global Gap, Rainforest Alliance, Fair Trade, Organic Certification and SYMETA will increase compliance levels of farmers making produce from these provinces highly sought-after internationally.

Going forward
To help Manicaland and Masvingo provincial leadership develop export clusters, ZimTrade — the national trade development and promotion organisation — will open new offices in Mutare in the next few weeks earmarked for improving the development and promotion of exports from Zimbabwe’s eastern region.

This development will ensure that industry and farmers associations, government agencies and existing as well as potential exporters resident in the two provinces can conveniently access real time information on trade related initiatives.

The office will improve access by local businesses to trade protocols whether bilateral or multilateral trade agreements. To boost trade in the region, there is a need for more companies to register and make use of trade agreements signed by the country.

However, because of information gaps, some companies fail to access preferential treatment that are outlined in these agreements, which affects their price competitiveness in export markets.

Armed with current and reliable information, businesses in Manicaland and Masvingo provinces are expected to deal under trade agreements, including SADC and COMESA, that will improve their competitiveness.

Allan Majuru is ZimTrade chief executive.

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