The Sunday Mail
Trade Focus
Allan Majuru
THE coronavirus (Covid-19) pandemic has brought considerable human suffering and major economic disruptions around the world.
Zimbabwe has not been spared. This pandemic has seen many countries reassess their priorities, with many sacrificing travel, trade and tourism activities as a preventative measure against the spread of the virus.
Restricted movement of persons
Governments are applauded for coming up with various measures to contain the spread of the disease.
Whilst there is no better way to stop the spread of the virus than reduce movement of persons, particularly across borders, it is important to acknowledge that such tough solutions immediately affect planned economic activities.
For example, free movement of persons across borders is an enabler of increased trade and business engagements between companies of different countries.
With most countries effecting travel restrictions and many airlines cancelling flights, this will result in less inflows of businesspersons interested in trade, tourism and investment in Zimbabwe.
The tourism sector has been the hardest hit by the travel bans, with tourist centres such as Victoria Falls recording the lowest arrivals in more than a decade with some hotels forced to close due to lack of business.
Investments have also been affected heavily. With regards to exports, there are activities that had been lined up to promote linkages between local manufacturers, service providers and potential buyers — that have been postponed.
For example, ZimTrade, the national trade development and promotion organisation, was facilitating an inward buyer mission targeted at buyers in the Zambian fast-moving consumer goods and mining sectors.
In the interest of public health, the mission had to be postponed, with potential implications on new trade partnerships with buyers from Zambia.
In addition, Covid-19 is expected to delay some trade-related activities run by ZimTrade. These include trade fairs (exhibitions), market surveys, inward and outward buyer missions, and PUM and SES expert capacity interventions as countries continue to ban international travel and gathering of large groups.
To reduce the impact of travel bans, local companies must quickly come up with internet-based solutions that will make it easy to connect with potential business across the world.
Investment and trade-related engagements can easily be substituted by virtual meetings, a solution that is easily understandable as the buzzword of late has been social distancing.
These virtual meetings will need to be complemented by a strong online presence by local companies, where they showcase their products and provide further user assistance and contact details.
With regards to tourism, this is the time for players in the tourism sector to adopt virtual reality options that will allow guided tours of any place around the world.
Imagine selling a virtual reality experience where people across the world can have an experience of Victoria Falls or Great Zimbabwe through a simulated environment.
This can potentially revolutionise the tourism industry, especially now that most people across the world are confined to their homes. Tourism stakeholders must come together and create applications that simulate the experience of visiting Zimbabwe, package them in an application and sell to potential clients around the world.
Observing social distancing
Closing borders has been identified as one of the ways to curb the spread of the virus, coupled with the need to observe social distancing.
As the number of bans within Africa increases, trade within the region is likely to be affected in the short term as countries reduce importation.
This could have an immediate impact on demand for Zimbabwean exports like tobacco, fruit and nuts, live animals, just to mention a few. The intervention measures put in place by South Africa in combating the spread of coronavirus will be felt much by Zimbabwean exporters since it takes about 49 percent of Zimbabwe’s total exports.
The good thing is cargo is not affected. This situation in Africa is almost the same across the world where Zimbabwean exports will likely be affected by restricted movements, ban of air travel or grounding of ships which transport the bulk of the country’s exports.
According to Trade Map, Zimbabwe’s exports to Europe in 2018 were US$60 million from products such as precious stones, cut flowers, vegetables, raw hides and skins, leather, works of art and tobacco.
As of now Europe has become the epicentre of Covid-19 and the measures they have taken will have a negative impact on trade between Zimbabwe and Europe as some orders are expected to be cancelled.
In addition, Covid-19 has taken hold in the United Kingdom where many people are choosing to work from home and eating out less, which has led to a decrease of some food prices. The shutdown of both local and open-air markets has significantly reduced demand for fruit and vegetables in the United Arab Emirates where overall consumption volumes are in decline.
To put figures to this, the price of mixed-quality garlic was US$1 050 per tonne before the outbreak of the virus.
However, the outbreak of the corona virus disrupted regular patterns in the garlic market where the growing garlic reserve combined with a shrinking consumer demand caused panic in the garlic market and caused the price to drop by US$300.
Whilst supply is low, it is important for local exporters to concentrate on production, ensuring that they increase output, which will make it easy for them to meet demand as soon as restrictions are removed.
Already there are markets that have recorded a sharp increase in the prices of horticultural produce such as vegetables and fruits.
For example, the Netherlands, which is the biggest destination of Zimbabwean horticultural exports in Europe — has experienced an increase in demand for fruits and vegetables like pineapples, oranges and apples.
This is an outcome of consumers seeking multivitamin foods rich in antioxidants to gain what they believe is a defence against the coronavirus.
The result is that prices of fruits like pineapples have increased from an average US$1,30 per kg as at December 31 2019 to US$3,14 this month. A rise in the price of some fruits and vegetables has also been reported on the wholesale markets in Bulgaria due to an increase in demand for fruits and vegetables which has increased by 5 to 10 percent.
Across major markets, the increase applies mostly to imported foods including lemons, bananas, oranges, kiwis, mandarins, blueberries, broccoli, cucumbers, tomatoes and more. Therefore, farmers and exporters of horticultural produce in Zimbabwe are encouraged to focus on increasing quality and quantity so that they capitalise on the higher prices once markets begin to open.
Zimbabwe’s trade with China
Covid-19 is expected to impact China’s global trade for several months as it recorded the first case of the virus.
China is one of the Zimbabwe’s top trading partners, with Zimbabwe exporting goods worth US$974 million in 2019 according to Trade Map.
Currently, there are cases where Chinese import companies are cancelling orders due to port closures and hence Zimbabwe’s exports to the country are affected. With China having shut down its manufacturing centres and closed its ports, there will be a resultant decrease in demand for Zimbabwean products.
At the same time, closed borders in China mean Zimbabwean manufacturers that rely on raw materials and other consumables from China will be affected and the spiral effect of reduced manufacturing in China will have a toll on Zimbabwean industries.
According to Trade Map, China is the third largest country that Zimbabwe imports from with a total import value of US$368 million recorded in 2019.
The major products that Zimbabwe imports from China include machinery, mechanical appliances, boilers, electrical machinery, equipment, vehicles, chemical products, rubber and plastics.
Zimbabwe mainly imports raw materials and machinery for production purposes, which are then used to manufacture different products some of which are exported.
Going forward, it is important for local companies to start considering locally produced raw materials that can support businesses.
This can be easily achieved if stronger linkages are created between suppliers and buyers so that they can strike a balance between supplying the quality products and right prices.
This import substitution will allow the country to create employment and at the same time preserve the scarce foreign currency.
