DRC worthy market for local firms

08 Sep, 2019 - 00:09 0 Views

The Sunday Mail

Trade Focus
Allan Majuru

Zimbabwe’s diverse agriculture, mining, pharmaceutical, manufacturing and tourism sectors present viable solutions that are sought after in the Democratic Republic of Congo (DRC).

The huge population, untapped resources and prospects for growth in the DRC offers opportunities for local companies to increase exports into the country and other parts of central Africa.

With a population of almost 81 million people (according to United Nations) and a rich mineral base, the DRC presents a lot of trade and investment opportunities for Zimbabwean businesses.

Local companies can also take advantage of the good political relations between Harare and Kinshasa to increase their exports.

Furthermore, both countries share common membership in the Southern Africa Development Community (Sadc) and the Common Market for Eastern and Southern Africa (Comesa).

Zimbabwe’s current trade with DRC does not adequately represent the political and economic co-operation that underlies the history of the two countries.

According to Zimstat, Zimbabwe exported goods worth only US$1,4 million to DRC between February and December 2018.

This is against the huge imports and exports recorded by DRC in the same year.

Figures from Trade Map — an online portal for the world’s trading statistics — indicate that DRC imported goods worth an estimated US$7 billion in 2018, up from US$5,1 billion in 2017.

At the same time, Kinshasa exported goods worth US$11 billion in 2018, up from US$8,2 billion a year earlier.

These trade figures indicate that the population, especially those living in mining towns, have enough buying power to consume imported products.

In addition, this indicates the capacity of DRC businesses to import capital equipment, which is normally expensive.

DRC’s major imports in 2018 were in the mining sector, with US$1,1 billion spent on machinery and mechanical appliances, and Zimbabwean businesses can tap into this opportunity.

Other products, whose demand has been increasing include electrical machinery and equipment, vehicles and articles of iron or steel.

Further to these, pharmaceuticals and medical supplies represent some of the major export opportunities for local businesses.

Owing to similarly occurring disease patterns, the DRC market provides a relatively familiar landscape for local pharmaceutical companies.

There is also potential for processed foods and dairy products.

A survey of the DRC market conducted by ZimTrade — the national trade development and promotion organisation — revealed that South Africa and Zambia have a huge market share in the DRC’s fast-moving consumer-goods sector.

Given Zimbabwe’s advanced manufacturing industry, which is arguably a step ahead of Zambia, local businesses can increase supplies to Zambia as a gateway to DRC.

Thus, it is imperative for local companies to also take advantage of Zambia’s proximity to supply the DRC market.

A thriving informal sector at Kasumbalesa could be used as a gateway into DRC, where local companies can establish distribution channels at the land entry point and indirectly supply the country.

It is important to note that some sections of the DRC market are already familiar with Zimbabwean brands.

A survey conducted by ZimTrade revealed that several consumers in the Katanga area have a general preference for Zimbabwean products.

Products being imported include milk, yoghurt, cheese, chicken, cold meat, beef, as well as tinned foods.

Other products on the import list include cereals, mayonnaise, tomato sauce, fruit juices and cooking oil.

In the services sector, DRC offers opportunities in the insurance industry, which is still in its infancy.

Currently, there are only three players operating in the country and the industry has recently been regulated.

Information communication technology and banking are other service industries that local players can consider.

Opportunities in the banking sector include automation technology and electronic banking facilities; investment and asset management; and accounting and tax consultancy.

In considering entering these service industries, it is important for local businesses to understand French, which is the official language and is the universal medium for business.

Related to this, branding and labelling of products should be pre-dominantly French for easy market penetration.

Labelling in both French and English will maximise on sales as well as create seamless communication between Zimbabwean exporters and potential buyers.

Further opportunities in DRC are in agro-chemicals and farming equipment as the country has, in the past few years, been experiencing an annual shortage of fertilisers and other agro-chemicals.

Most imports of agro-chemicals are sourced from Zambia and South Africa, and they are imported for maize, soya beans and vegetables.

Local companies can tap into the opportunity by engaging Zambian partners that are already operating in the market.

These will use existing channels to supply their market, which, in turn, will increase visibility of Zimbabwean brands in the DRC’s agriculture sector.

The DRC government has been working on modernising farming activities.

This has created the need for appropriate technology in the agriculture value chain.

Required products that local businesses can supply include hand-held farming equipments, tractors, cultivators and planters, among others.

In addition, a survey by ZimTrade indicated that most of the rural smallholder farmers do not have livestock such as cattle or donkeys for animal-drawn implements.

This deficit, therefore, presents an opportunity for Zimbabwe to consider exporting both livestock and agricultural equipment.

The construction industry in DRC is booming, as evidenced by some high-rise cranes in Lubumbashi.

The real estate sector is also growing, especially with the construction of high-rise and garden apartments, as well as residential housing.

Most of the projects that local firms can champion are open to international contractors, as some contractors in DRC lack either the financial capacity or the human capital required to undertake such projects.

Additional opportunities in the construction sector are in provision of services such as engineering, architecture and surveying.

The vast pool of Zimbabwean professionals should consider bidding for contracts in both the public and private sector.

However, the best option when considering government projects is to work with partners in DRC, who have a better understanding of the political, social and economic terrain.

Having considered these opportunities, there are two viable market entry options to penetrate the DRC market; that is, distributor and dealer arrangements.

In other sectors such as pharmaceuticals and construction, joint ventures and warehousing can also be viable options.

Companies can also leverage on Zimbabweans living and working in DRC and use them as a springboard to enter the market, especially considering the language barrier that may be challenging for growing companies.

When transporting goods, local companies should understand customs processes and submit declaration documents through a registered clearing and forwarding agent at least seven days before arrival of the goods at the border.

ZimTrade has been engaging in several activities to boost Zimbabwe’s exports to DRC.

In June this year, it facilitated the participation of 10 companies at the DRC Mining Week held in Lubumbashi.

Participating companies were drawn from the following sectors: mining and industrial safety, building and construction, engineering, fruits and vegetables, and information technology.

 

Allan Majuru is ZimTrade’s chief executive officer.

 

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