Zim should diversify export basket: Nzenza

Following the rebound of the manufacturing sector, Zimbabwe is now focusing on accelerating export diversification to escape potential global commodity price shocks, according to Industry and Commerce Minister, Dr Sekai Nzenza.

Minerals dominate Zimbabwe’s export basket, which account for over 80 percent of foreign earnings in 2021 and export diversification will help the southern African nation to insulate itself from price volatilities of the commodity prices.

Last year, Zimbabwe recorded its highest ever foreign currency receipts, boosted by strong commodity prices and increase in international remittances, according to the Reserve Bank of Zimbabwe.

Foreign receipts amounted to US$9,7 billion from US$6,3 billion in 2020 with exports accounting for US$6,2 billion.

Minerals constituted about 83 percent of foreign receipts after exports grew by 38,4 percent to just over US$5 billion from US$3,7 billion in 2020, a reliance that ordinarily makes the country vulnerable to price shocks of the minerals commodities.

Following the rebound of the manufacturing sector despite the Covid-19 pandemic, with locally produced goods now occupying about 80 percent of the retail space, Dr Nzenza said the focus has now shifted towards improving competitiveness of local products.

“Given the launch of AfCFTA, the country is also emphasizing on promoting competitiveness of our local products, to help penetrate the export market through increased production, productivity as well as competitiveness and help Zimbabwean products penetrate the region and international markets,” said Dr Nzenza.

“In this regard, the National Competitiveness Commission has already started working with various value chain players to help determine the costs drivers in each value with a view to tackle the impediment to industry competitiveness.

“The ministry will also be working with the private sector to for the localisation of more value chains and promote and showcase the higher value Zimbabwean brands under the “Made in Zimbabwe and Buy Zimbabwe mantra”, Dr Nzenza added.

Zimbabwe’s manufacturing sector performance is estimated to have increased in 2021 following volume recoveries across sub-sectors that include foodstuffs, chemical and petroleum products, alcoholic and non-beverages, tobacco and non-metallic mineral products, supported by the auction system that provided foreign currency.

Capacity utilisation is projected to increase to 61 percent in 2021 from 47 percent a year earlier, surpassing the target of 50 percent. Industry on its part is also embracing technology and modernisation in line with the Government on the accelerated use of ICTs.

Analysts say Zimbabwe was at the mercy of international prices and efforts should be made towards export diversification to escape potential price shocks commodities.

“It is (mineral dependent) not a healthy situation,” economist Tatenda Ruwano said in an interview last week .

“The economy is so vulnerable…when prices fall, the impact will be so devastating.

‘‘More avenues need to be opened to expand the (export) basket.
Dr Nzenza said the Government had been engaging the private sector to “prepare and embrace themselves for the AfCFTA”, a potential game changer for local companies.

Dr Nzenza also noted that there was no doubt Zimbabwean companies would benefit from the trade pact which would present opportunities for local businesses to diversify their exports as well as open better access to raw materials from Africa.

The World Bank has estimated that the successful implementation of the AfCFTA has the potential to add US$450 billion to Africa’s gross domestic over the next 10 years.

In addition, Africa’s exports are expected to increase by US$560 billion, mostly in the manufacturing sector.

“Zimbabwean companies are urged to make their products more competitive, so that they are able to penetrate the intra-continental export markets, which is currently dominated by commodities and low-value-added products, to include higher-value-added products that yield higher returns,” said Dr Nzenza.

“Government on its part will ensure that all the red tape is cut with simplified customs procedures thereby bringing significant income gains. Reduced tariffs among member countries and removal of technical barriers to trade, will help in trade facilitation and boost output among the manufacturing companies. This will also mean an expanded market for Zimbabwean products such as sugar, fish, malt, black tea and peas, wood furniture and construction materials such as doors and windows.

“What is now crucial is for Zimbabwean businesses to seize the opportunity to increase the presence of their products in African countries,” Dr Nzenza advised. – eBusinessWeekly