The Sunday Mail
Trade Focus
Allan Majuru
ONE of the key result areas under the National Development Strategy 1 (NDS1) launched by President Mnangagwa last year is to increase Zimbabwe’s exports through promotion of local products and market diversification.
To achieve this, the Second Republic has been advancing economic diplomacy, underpinned by the “Zimbabwe is Open for Business” mantra, which aims to turn good political relations into economic gains.
African markets have been identified as low hanging fruits for Zimbabwe, based on our shared history, cultures and traditions.
They could provide a stable ground for increasing exports and earning foreign currency.
This explains the current drive by Government and related institutions to strengthen relations with fellow African countries and their institutions.
For example, four agreements were signed in March this year to cement bilateral relations with Rwanda at the inaugural virtual session of the Joint Permanent Commission on Cooperation (JPCC).
One of the agreements, signed between ZimTrade — the country’s trade development and promotion organisation — and Rwanda Development Board, is targeted at promoting beneficial trade between the two countries.
To this end, ZimTrade recently undertook a survey in Rwanda to gather relevant intelligence that can guide and enable Zimbabwean companies to export their products to the country.
The survey, which focused on Fast Moving Consumer Goods (FMCGs), building and construction, horticulture/agriculture and services covering Information Communication Technology, education and tourism, revealed vast opportunities for Zimbabwean businesses.
The survey helped identify areas with opportunities, route-to-market, distribution channels and some of the market requirements that will enable Zimbabwean companies to land products and services in Rwanda with ease.
There is potential for exports to Rwanda for products such as pharmaceuticals, dried fish, processed foods, building and construction materials, wooden furniture, processed tobacco, cane sugar, poultry (hatching eggs) and agricultural inputs (fertilisers, insecticides, fungicides and herbicides).
Key export opportunities in Rwanda
Rwanda is one of Africa’s fastest growing economies, with an average annual growth rate of 7,2 percent and growth domestic product (GDP) per capita of US$818.
Economic growth in 2019 exceeded 10 percent and the key drivers of growth were investments into the implementation of the National Strategy for Transformation.
The political environment is stable, and this is indicative of a viable economic environment where demand can be sustained over long periods of time.
The country’s population, currently estimated at 12,95 million, and its production-led development agenda has created markets for food, raw materials, and services.
The government of Rwanda has prioritised the manufacturing, building and construction and agriculture sectors as vehicles for sustained economic development.
Crucially, Rwanda is highly dependent on imports for most of its requirements.
Rwanda has a high import bill on account of ongoing large infrastructure projects and a growing industrial base.
The most imported products, by value, include electrical machinery and parts, electronic equipment and parts, vehicles and accessories, pharmaceutical products, machinery appliances and parts, cereals and other foods items, cement and construction equipment, energy and petroleum, iron and steel.
Major suppliers of these products are Tanzania, Kenya, China, United Arab Emirates, India, and Europe.
For Zimbabwean businesses, there is potential to increase exports of the same products, leveraging on distance, and bilateral and multilateral trade agreements.
This means Zimbabwean companies have the advantage of landing products at a low cost compared to competition from across the continent.
The Great Lakes nation continues to import high volumes of processed foods as it sets up its manufacturing industry and develops its value chain.
Zimbabwean companies can supply processed foods products such as cereals, sugar, processed meat, dairy products, rice, snacks, and beverages.
Currently, the biggest exporters to Rwanda from the region are Zambia, Kenya, Tanzania, and South Africa.
The country’s population is concentrated in Kigali, which naturally accounts for the most consumption and opportunities for Zimbabwean products.
Infrastructure development is taking place at a rapid pace, with new buildings coming up across major towns, in support of the Meetings, Incentives, Conventions and Exhibitions (MICE) tourism industry.
Here, Rwanda plans to be a premier destination for international events, hence there is massive infrastructure development in order to increase the country’s hotels, offices, conference and sport facilities.
This transformation also includes development of road works, upgrading lighting and traffic control systems as well as housing, as residences are being relocated to areas outside of the central business district.
The building and construction industry has been a solid foundation for investment opportunities with many foreigners penetrating the country through partnerships with local companies.
The tender process/bidding process for infrastructure projects is open for any registered companies to participate and Zimbabwean companies have fair chance to win some of the tenders.
In addition to infrastructure development, the government of Rwanda is prioritising development of the agriculture sector as one of the key drivers of economic growth.
Smallholder farming forms the baseline of agriculture and is receiving support through government and private players.
Key crops being grown there are coffee and tea for exports and maize and soya for input into the agro-food processing sector.
There is potential in exporting farming skills and related services to improve their farming techniques.
This offers numerous opportunities for Zimbabwean companies to provide inputs, implements, machinery, and services into the sector.
In addition, the services industry is dynamic and plays a key role in economic development.
Services sector such as Information, Communication and Technology (ICT) has allowed for organised systems and ease of doing business.
Zimbabweans can benefit from knowledge sharing exchange programmes in these sectors as there is much to be learnt from both countries.
Route-to-market
Zimbabwean companies are encouraged to have local representation if they want to penetrate the market with speed.
This could be working through distributors or setting up distribution offices or warehouses.
Product adaptation is also key, especially on packaging and labelling, which require French or Kinyarwanda translation.
For example, Rwanda is on a drive to reduce its carbon footprint by promoting the use of bio-degradable packaging for products as a replacement for plastic.
Most of Rwanda’s packaging material is imported and there are opportunities for Zimbabwean packaging companies to supply tin can, labels and paper bags for processed foods and retail stores.
Most stores currently use plain, unbranded packaging as carrier bags.
The main consideration is quality because the Rwandans require the products to be of good quality.
Focus should also be on pricing because there is intense competition from products being imported from Asia and parts of Africa.
Logistics is a key consideration especially for bulky goods since they require road/sea freight.
High value low volume products can utilise air freight.
Logistics costs are a key consideration in determining the final price in the market.
Doing business in Rwanda requires relationships in areas like contracting, banking and legal aspects.
Serious investment in French and Kinyarwanda languages is needed when establishing in Rwanda.
Most Rwandans living in the cities speak either French or Kinyarwanda as their first language.
English is a business language, but many people have very limited experience and knowledge of the language and prefer French instead.
The full survey report is available upon request at ZimTrade offices in Harare, Bulawayo, and Mutare.
Allan Majuru is ZimTrade chief executive.
