The Sunday Mail
EXPORTS present the most sustainable way of earning foreign currency.
Trade Focus
Allan Majuru
The Second Republic, under President Mnangagwa, has been pushing for an export-led economy through the National Development Strategy 1, where all businesses are being encouraged to ensure part of their production is reserved for regional and international markets.
However, for exports to meaningfully contribute towards Vision 2030, local businesses must ensure products destined for foreign markets are value added.
This is why value addition and beneficiation are currently at the centre of the Second Republic’s development agenda.
Speaking during the Zimbabwe-Rwanda Trade and Investment Conference, organised by ZimTrade and its partners early last year, President Mnangagwa challenged businesses to discuss viable options that will increase value addition and export diversification.
“In doing so,” he said, “Africa will put to an end the perennial and unfortunate challenge of exporting primarily raw commodities from its sectors of the economy.”
This policy thrust has since seen an increase in exports of manufactured products.
For example, exports of manufactured or valued-added products increased by 12,9 percent from US$324 million in 2021 to US$366 million in 2022, according to the Zimbabwe National Statistics Agency.
But more needs to be done.
Why value addition?
Value addition is the process of changing the product’s value by transforming its current place, time and form characteristics to those preferred in the marketplace.
Cotton, for instance, can be processed into yarn and fabrics, which can be used to manufacture clothing items such as workwear, shirts, suits, skirts and jerseys.
We can also end up with products like nets, ropes and carpets.
When branded, these finished products can be sold at prices many times the value of their raw materials, generating more foreign currency for the country.
According to a study conducted by the Zimbabwe Textile Manufacturers Association, a kilogramme of cotton fibre with an approximate value of US$1,85 can be value added to produce three cotton T-shirts with an approximate market value of US$12.
Value addition, in this instance, will require ginning and weaving, and the process will produce by-products such as cotton seeds and husks that can be further processed into oils, stockfeeds and fertilisers.
These goods and by-products will create forward and backward linkages, providing raw materials to the industry, as well as agriculture.
So, higher prices and increased profits can be realised from the sale of value-added goods.
In addition, value-added goods are able to stand out and be differentiated from competitor products through branding and improved packaging.
Well-manufactured, branded and packaged products can increase market share for exporters, as they tend to attract more customers, who eventually become loyal to those brands.
In the long run, value addition also results in cost efficiency, as manufacturers are able to produce higher-value goods with the given resources.
Industries actively involved in value addition can create employment along the value chain.
The leather industry value chain, for example, includes animal husbandry, industrial and assembly processes, as well as branded marketing, after which finished and semi-finished products are traded between companies and countries.
The industry’s success relies heavily on state-of-the-art manufacturing skills that improve operational efficiency, leading design skills and information technology systems, and top-notch marketing of products.
The returns of each sub-industry are very high. Research and development are at the core of continuous improvement for the industry.
Value addition also results in increased national and regional gross domestic product.
Dried and value-added agro-produce
Opportunities for value addition in sectors such as agriculture and allied industries are immense.
The last few years have seen an increase in the production quantity and quality of fruit and vegetables, yet these are mostly being exported in their raw state.
However, dried vegetables and herbs have various culinary applications, both locally and abroad, just like cured, canned, smoked and pickled foods. In most cases, these cost more and offer better returns for companies.
Looking into the future, international demand for dehydrated vegetables and herbs is highly likely to increase owing to the convenience and health benefits they offer.
According to Trade Map, US$3,8 billion worth of dried vegetables — whole, cut, sliced, broken or in powder form, but not further prepared — were exported in 2021.
Top exporters included China, the United States, Germany, the Netherlands and India.
Egypt is the only African country in the top 10, as it shipped its products to Japan, Belgium, the US, the Netherlands and Germany.
In 2019, Egypt exported 13,6 tonnes of dried onions worth US$39,1 million, which represented 8,1 percent of total global exports.
Cutting post-harvest losses
Value addition can also address food wastage and reduce post-harvest losses.
Where all fresh agricultural produce cannot be absorbed by the local and export market, it can be transformed into various other products.
The Agricultural Business Centre — a social enterprise that adds value to farm produce through drying — harnesses mangoes in areas such Gokwe, Nkayi and their environs to produce dried products.
The organisation also expresses oil from sunflower, while the cake — a by-product — is used to manufacture stockfeeds.
Value addition has also seen the empowerment of women through sustainable businesses. For example, Shumbakadzi, a Bulawayo-based woman-led business, sources organically grown fresh fruits and vegetables from local smallholder farmers and further processes these into a variety of healthy, preservative-free foods and snacks.
Multibrands, another Bulawayo-based female-led company, is also producing high-quality sauces and condiments from local fruits and vegetables.
It has attracted considerable interest in South Africa and is currently servicing orders from that market.
Allan Majuru is ZimTrade’s CEO
