PPPs key in promoting investment and trade

02 Oct, 2022 - 00:10 0 Views
PPPs key in promoting investment and trade

The Sunday Mail

Ronald Chituri

A private sector-led trade and investment fair held in the United Kingdom last month must bring to the fore the important role that a free enterprise system can play in supporting governments in their efforts to grow their countries’ economies through promoting cross-border investments and trade.

This is particularly important for Zimbabwe, which is thirsty for new investment opportunities and export markets that could increase its foreign currency receipts.

A total of seven exhibitors, namely, Beta Bricks, Nyaradzo Group, Mukuru, Pinnacle Properties, Stanbic Bank, Kingfisher Prints and Avelyn Collections took part in the four-day trade and investment fair held in Letchworth Garden City, Hertfordshire, from September 15 to 18.

The fair drew sizeable crowds that exceeded the organisers’ expectations, persuading Nyaradzo Funeral Services (UK), which put together the fair, to turn it into a permanent feature on the UK calendar.

Coming at a time the authorities in Harare are working hard to drive up foreign direct investment (FDI) and grow their share of exports in order to end Zimbabwe’s long-running foreign currency crisis, the initiative by Nyaradzo has helped shine the spotlight on the vast UK market, which has a population of about 67 million people and a Gross Domestic Product of US$3,2 trillion (2021).

The fair has opened immense possibilities for similar initiatives in other territories such as South Africa, France, Italy, Germany and the United States, where local brands stand a good chance of pushing big volumes of their products.

Following Nyaradzo’s UK Trade and Investment Fair, there is a sense that the showcase should inspire other private sector players in Zimbabwe to invite their fellow counterparts in the Southern African nation into markets where they have already established themselves, taking a leaf from Nyaradzo Group.

After firmly establishing themselves in Letchworth Garden City a few years ago, Nyaradzo felt compelled to use their presence in the world’s fifth largest economy to bring other Zimbabwean companies into the UK market, while at the same time spotlighting opportunities in their country of origin to UK companies.

Endowed with vast mineral wealth, good climatic conditions for agriculture and breath-taking tourism products, such exhibitions may turn out to be a game changer for Zimbabwe in its quest to drum up FDI and exports, if replicated on a wider scale through private-public-partnerships (PPPs), in which the former takes the lead.

Gone are the days when the belief was that promoting investment and trade was the sole responsibility of Government through agencies such as ZimTrade (established in 1991), and the Zimbabwe Investment and Development Agency (ZIDA) [born in 2006 out of the integration of the Zimbabwe Investment Authority (ZIA), and the Export Processing Zones Authority (EPZA)].

Bearing in mind the perennial budgetary constraints that inhibit ZimTrade and ZIDA from discharging their mandates effectively, the initiative by Nyaradzo has demonstrated that nothing, really, should stop non-State actors, especially the private sector, from complementing Government’s efforts in promoting trade and investment.

Why is it important for the private sector to jump in uninvited?

In politics, they say that if you are not at the dinner table, then you are probably on the menu.

The same applies in the business world, where it is folly to leave the burden of opening new markets in the hands of the Government, which is already overstretched for resources.

In a brutally competitive global economy like the one we live in, companies throughout the world are aggressively seeking to expand their markets by pushing boundaries into new territories to keep their lights on.

The private sector needs access to new markets in which to sell their goods and services to grow and strengthen their balance sheets, generate the much-needed foreign currency and create jobs for the country.

By creating linkages with other markets through trade and investment fairs, the private sector would be well on its way to creating healthy competition, which often results in improved quality of goods and services, as well as competitive pricing, which, ultimately, benefits the consumer, who would be spoilt for choice by virtue of being exposed to new products and services.

Since the beginning of the industrial revolution in the 1760s, trade exhibitions like the one hosted by Nyaradzo in the UK have emerged as a good way of raising profiles of participating companies and generating awareness around their brands.

Studies have shown that such exhibitions offer unique opportunities for participating companies to publicise their new product offerings, develop strategic alliances, observe their competitors and acquire new customers.

By offering face-to-face interactions among exhibitors, non-exhibiting attendees, organisers, industry associations, distributors, intermediaries and Government agencies, trade exhibitions are viable platforms for building relationships.

Meeting with potential customers at an exhibition helps participating companies to start building their marketing lists and generate qualified sales leads.

In their journal titled “Driving participation and investment in B2B trade shows: The organiser view”, renowned authors Roberto Mora Cortez, Wesley James Johnston and Srinath Gopalakrishna averred that while trade shows are still an under-researched stream in business-to-business (B2B) marketing, they generate a significant amount of business, with more than 1,5 million American and Canadian firms exhibiting at trade show events each year, attracting over 60 million attendees.

As it continues to extend its influence across the globe, China has not only benefited its internal economic and political stability through exhibitions and foreign policy, which is steeped in advancing its economic interests, but —in the long term — shape the regional and global order.

China’s mission is to guide the international society towards a more just and rational new world order.

Love them or hate them, in China, the development of the exhibition industry is something that Zimbabwe should learn from.

With the rapid development of global trade and the acceleration of global economic integration, the exhibition industry is something worth watching as it has attracted more and more attention from all over the world.

With the long period of continuous reform and opening up in China, the economy has long been in a state of rapid development.

The exhibition industry, as a comprehensive business activity, has begun to gradually expand, growing at an annual rate of more than 20 percent.

In another journal titled “The Impact of Convention and Exhibition Industry on Regional Economic Development Based on Grey Relational Model”, author Xiaoning Yang notes that in today’s world, the United States and Europe are also making an impact, with the latter becoming a well-deserved exhibition industry leader with technological, transportation, communications and other technical advantages.

While ZimTrade and ZIDA are at the forefront of promoting trade and investment in key markets, they definitely need the support of the private sector. Since they are funded from the fiscus, they suffer endless budgetary constraints at a time when today’s global community is increasingly relying on the corporate sector to find innovative and sustainable solutions to key international challenges such as geopolitical shocks, cybersecurity, climate change, and trade and investment promotion.

As already demonstrated by Nyaradzo, combined efforts from the social, private and public sectors are necessary to mobilise coalitions or networks to respond to societal expectations and strengthen social coherence.

In a globalised economy, corporations aim not only to win customers and make profits, but to create relationships beyond buyers and sellers with other external stakeholders (employees, suppliers, investors, consumers, communities and countries).

For now, Nyaradzo’s efforts are focused on the UK market, which shares a lot in common with Zimbabwe. Until April 1980, when the country attained its independence after a protracted liberation struggle, Zimbabwe had been a British colony since the 1890s when Cecil John Rhodes and his British South African Company (BSAC) started their occupation of African territories.

Due to the migration of British citizens to Zimbabwe from the 1880s onwards, the two countries have over the years grown to share strong cultural ties, with the English language being the main medium of instruction in business and schools.

An estimated 20 000 British nationals were living in Zimbabwe as of two years ago, with over 112 000 locals having relocated to the UK.

The number of Zimbabweans in the UK might have spiked in view of the huge demand for care workers, educators and other skilled personnel in the UK, which lost scores of frontline professionals at the height of the Covid-19 pandemic.

Much can be said about the two countries’ economic ties.

Before the turn of the millennium, trade between Zimbabwe and the UK was booming.

Over 100 British companies were operating in Zimbabwe at independence, with Anglo American, Unilever, Standard Chartered Bank, Barclays Bank, Shell, Rio Tinto and BAT being among the largest.

From being the UK’s second largest trading partner after South Africa, Zimbabwe is now ranked number 138 and accounting for less than 0,1 percent of total UK trade.

From a peak of £461 million in 2018, trade between Zimbabwe and the UK has declined to £126 million as of last year.

Now that the new government of President Mnangagwa has placed re-engagement with the international community at the top of its agenda, the UK has been sending some positive signals.

During the World Trade Organisation (WTO) Trade Policy Review of Zimbabwe, held in Geneva in September 2020, the then UK’s Ambassador to the WTO and the United Nations, Julian Braithwaite, said Zimbabwe was an important trade partner for the UK.

At a summit of leaders of 21 countries which came days before the UK left the European Union (EU), former UK Prime Minister Boris Johnson called for deeper investment ties between Britain and Africa, with Zimbabwe being tipped to take a prominent role on account of its vast mineral wealth and tasty horticultural products.

Following its exit from the EU, the UK has been keen to develop business ties with countries outside Europe. The UK is particularly keen on helping countries extract and use oil and gas in the cleanest way possible and on encouraging investment in solar, wind and hydro-power schemes.

With Zimbabwe being a gateway to Southern Africa through the North-South Corridor, its strategic location can, therefore, help UK firms successfully expand exports into the rest of Southern Africa, taking advantage of its sound logistics, roads, rail, power and telecoms.

Likewise, Zimbabwean companies currently enjoy duty-free and quota-free exports for products into the UK, including blueberries, peas and tea.

A lot of other opportunities exist for suppliers of fresh produce (flowers, vegetables, fruits), processed foods, arts and crafts (accessories and visual arts), clothing, equipment and accessories, vehicles and processed foods, as well as services (with a special focus on the labour market).

Considering the United Kingdom-Eastern and Southern Africa Economic Partnership Agreement (UK-ESA-EPA) is currently in place, there is now a direct route to the market for Zimbabwean products, as local exporters will continue to enjoy tariff- and quota-free access in the UK market. Topping the list of imports from Zimbabwe to the UK are products such as vegetables and fruits, coffee, tea, and cocoa, jewellery, works of art, metal ores and scrap.

In order to realise Zimbabwe’s potential, ZIDA and ZimTrade would need Nyaradzo and many other corporates to get on board.

For such initiatives to be sustained, it would also help for the Government to reward those private sector companies that direct their resources towards promoting investment and trade by extending to them fiscal incentives such as tax holidays, reduced tax rates and, above all, a robust regulatory framework that takes into account their unique position in the growth of the economy.

 Ronald Chituri is a trade analyst based in South Africa


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