The Sunday Mail
IN his weekly column in The Sunday Mail recently, President Mnangagwa made it clear that for Zimbabwe “to secure our interests, we must deepen and broaden our global diplomatic footprint”.
Trade Focus
Allan Majuru
This diplomatic footprint will allow the country to be reintegrated into the global economy following years of isolation.
This year alone, the country has witnessed greater cooperation from African states and beyond, with strengthened economic engagements with countries such as Belarus, the United Arab Emirates, Qatar and Iran.
Ethiopia will also reopen its Chancery in Zimbabwe after it was closed a few years ago. In the Middle East and Gulf region, where Zimbabwe is casting its net wider, President Mnangagwa indicated that Government will soon be making announcements insofar as relations between Zimbabwe and Saudi Arabia are concerned.
Deepening relations between Harare and Riyadh should drive local companies to tap into the inherent trade opportunities.
Saudi Arabia at a glance
With a population of 32 million, Saudi Arabia is the dominant nation in the Gulf region.
It has abundant natural resources, a flourishing expatriate community of six million workers and one of the fastest-growing per capita incomes anywhere on earth.
Ranking among the world’s top 25 economies, Saudi Arabia is a land of great opportunity. Its key business regions are Riyadh, the Eastern province (which includes Dammam, Al Khobar, Dhahran, Jubail, Hofuf and Abgaig) and Jeddah.
His Royal Highness Mohammad bin Salman, billed as a reformer, has been quick to make his mark in his home country and around the world.
Through his Vision 2030 programme of economic reform and modernisation, he seeks to diversify Saudi Arabia’s economy from overreliance on oil while delivering greater inclusivity for Saudi citizens.
This presents opportunities for local businesses to export their world-leading quality, experience and expertise.
There is scope to supply horticultural produce such as essential oils, clothing and textiles, leather and leather products, services, healthcare, education, retail, energy and construction.
Saudi Arabia is home to high spenders and consumers of fruits, vegetables and meat products, and most of these goods are imported.
Low-hanging export options available for local farmers and businesses include oranges, grapes, pears, avocados, potatoes, shelled chickpeas, guavas, mangoes, stone fruits, tomatoes, strawberries and fresh cut roses and buds.
According to Trade Map, Saudi Arabia imported horticultural produce worth US$3,18 billion in 2021, up from US$2,72 billion in 2017.
Some of the top imported products in 2021 that local farmers can supply are citrus fruits (US$482 million); berries (US$251 million); apples, pears and quinces (US$212 million); and tea (US$189 million).
Other top imported products in the market were bananas (US$182 million); nuts (US$177 million); tomatoes (US$160 million); onions (US$148 million); dried leguminous vegetables (US$144 million); dates, figs, pineapples, avocados, guavas and mangoes (US$128 million); and grapes (US$101 million).
There is also a huge market for goat meat. Rural communities that are benefitting from the Presidential Rural Horticulture Scheme, as well as the Presidential Rural Goat Scheme, can also target this market.
However, meat producers who wish to export to Saudi Arabia must ensure their products are Halal certified.
This is the same case with manufacturers of processed foods, where product certification should be considered a must, as it will ensure easy penetration into the market.
To improve competitiveness of local produce, businesses must ensure the packaging provides convenience for the end user and meets regulatory requirements.
With 16 percent of the world’s oil resources, Saudi Arabia is Organisation of the Petroleum Exporting Countries’ key player and world’s largest petroleum exporter.
The kingdom’s Vision 2030 project seeks not only to cut oil dependency by 2030, but to also liberalise its economy, create a larger private sector and undertake crucial economic reforms. Education is a national priority targeting the country’s young people. These often lack the education and technical skills required by the private sector.
Zimbabwean educationists can capitalise on this new focus on education.
In recent years, approximately a quarter of the country’s budget has been earmarked for education and training.
Saudi Arabia is also investing heavily in four major economic cities — Hail, Al Madinah, Jazan and near Riyadh.
These investments are designed to create over a million new jobs, promote economic diversification and provide homes for up to five million people.
Doing business with Saudi Arabia
Foreign businesses do not need to appoint a commercial agent to operate in Saudi.
Companies can sell directly to Saudi Arabian companies.
Nevertheless, appointing an agent or distributor is the most common means of breaking into the market.
These relationships are regulated by the Ministry of Commerce and firms are allowed to have more than one agent on a regional basis. Agency deals need to be agreed with the ministry.
Virtually, all government purchasing is done by means of local tenders and, in most instances, only Saudi companies can bid. This is one area where an agent or partner is crucial.
Like anywhere else, it is important to appoint the right agent. It is also vital to clearly establish which services the agent will provide.
In terms of taxes, there is a 5 percent customs tariff on most exports to Saudi Arabia and a “protective tariff” of 12 or 20 percent to cushion local businesses.
Typically, corporate taxes of 20 percent apply to foreign companies and, though there have been no personal taxes in the past, there are plans to introduce a VAT regime.
Some goods such as pharmaceuticals, wireless equipment, veterinary medicines, pesticides and military uniforms must be registered.
The documents required for exports are the Arab Certificate of Origin (authenticated at a local chamber of commerce and translated into Arabic); the Saudi Arabian customs invoice, an authenticated invoice (in triplicate), clearly stating the country of origin, name of the carrier, brand and number of goods, and a clear description of the goods, including weight and value.
Also required are a bill of lading, insurance documents and Saudi Arabian Standards Organisation Certificate of Conformity issued by an approved certification body like Bureau Veritas.
Visas are required by all visitors to the country, except nationals of Gulf Cooperation Council states. Business visas are required for those taking part in trade missions.
If you do not have a Saudi sponsor, you will need a letter of attestation from the Chamber of Commerce.
Allan Majuru is ZimTrade’s ceo
