The Sunday Mail
Trade Focus
Allan Majuru
Zimbabwe is undoubtedly a force to reckon with and the economy can be easily revived if local businesses fully tap into opportunities available in regional markets.
According to market surveys conducted by ZimTrade — the national trade development and promotion organisation — the country’s vantage point is grounded on its geographical position, infrastructure, human capital as well as sound political relations with other African states.
Take for example, the construction sector in Zimbabwe has potential to supply products and services to Malawi, a country whose infrastructure projects are taking pace.
According to Malawi’s Annual Economic Report 2019, the construction sector in that country grew 4,5 percent in 2018 and is projected to grow by 5,1 percent by end of the year and further 3,5 percent in 2020.
This growth is being driven by several construction projects which started in 2018, such as the dual carriage way in Lilongwe and Blantyre, the Cancer Treatment Centre at Kamuzu Central Hospital, the expansion of Kamuzu International Airport and the construction of secondary schools across the country.
Malawi has also been making significant infrastructure progress in recent years, spanning the transport, water and sanitation, power, and mobile telephone sectors.
In Lilongwe alone, a lot of construction of buildings can be witnessed along most roads indicating a lot of development and opportunities for companies which produce building and construction materials.
Malawi’s construction sector is being driven by both public spending as well as private sector participation.
There is also some significant development in the sector catered for by development corporation partners and non-governmental organisations.
Given these infrastructure expansion projects, a recent survey concluded in Malawi last month revealed that local businesses have a shot at supplying building materials and construction expertise to Malawi.
Malawi currently imports most of its construction materials from countries like South Africa, Zambia and China.
In 2018, the import bill of cement in Malawi stood at US$39 million, according to Trade Map, indicating potential buying power for Zimbabwean exporters.
Of the imported cement, 47 percent came from Zambia alone with a small component coming from Zimbabwe.
According to Trade Map, Malawi’s imported cement worth around US$3,1 million from Zimbabwe in 2018.
For the rest of construction supply, top supplying countries in 2018 were India, China and South Africa.
Imported products, that Zimbabwean companies can also supply include, iron and steel structures and parts of structures such as window/door frames, roofing frameworks, tubes and pipes, nails and screws.
Other top imported materials, offering opportunities for local businesses, are ceramic tiles, PVC piping, bricks, steel pipes and other builders’ ware of plastics.
Zimbabwe has been the top supplier of gypsum into Malawi for the past five years, exporting nearly 9 000 tonnes in 2018, according to Trade Map.
This can be used as a benchmark of good business practices to supply more construction products.
In supplying products, construction supplies targeted for the consumer market are distributed through a number of retailers.
Currently, the distribution market is dominated by traders most of them operating one or a few chains.
It is, therefore, important for local suppliers to create direct links with these traders who can create further supply routes out of major towns in Malawi.
What has been working for South African traders is to set up shop in Malawi, where ownership is split with already existing players.
This has assured consistent uptake of South African products into the country.
With regards to competition, there are easy entry requirements which can place Zimbabwean companies, particularly well established at an advantage.
Current, the construction sector in Malawi is denominated by Small and Medium Enterprises (SMEs), which in most cases, have no capacity to take part in large Government tenders.
Despite the heavy presence of local firms, participation in the construction industry in Malawi is dominated by foreign firms which constitute only 2,8 percent of registered firms taking 85 percent of the construction business by value with the local firms taking the remaining 15 percent.
This is a further indication that Zimbabwean SMEs, offering a wide range of construction services can also participate in the Malawian market.
For SMEs wishing to take part in the market, they will have to rely firmly on Zimbabwe’s human capital, which has been producing some of the best minds in the construction industry in the region.
Regarding service provision in Malawi, only players who have been certified by the council can carry out construction related activities in the country, thus local businesses that wish to take part in the market must ensure that they are registered with all regulating institutions.
*Results of the market survey conducted in Malawi will be distributed at a seminar early next year. The Malawian market offers further potential in the fast-moving consumer goods sector and these opportunities are detailed on this column in the last edition of The Sunday Mail.
