THE African Continental Free Trade Area (AfCTFA), an ambitious trade pact to form the world’s largest free trade area by connecting almost 1.3 billion people across 55 African countries, can assist Zimbabwe in pivoting away from extractive exports.
For decades, Zimbabwe’s exports have been dominated by primary commodities such as nickel ore and concentrate, nickel matte, gold, tobacco, ferro-chromium, platinum and diamond. One of the challenges of relying on primary product exports is that the country might run out of its finite primary products, for example precious metals could become scarce.
Without diversification, this would leave the economy with a void. According to the Competition and Tariff Commission (CTC), the country should focus on non-extractive exports in order to benefit from the trade pact with a combined gross domestic product (GDP) of more than US$3.4 trillion.
It said Africa’s industrial exports are forecast to benefit most, given that the AfCFTA provides an opportunity for African nations to diversify trade from extractive commodities, for example minerals, which traditionally account for over 75% of Africa’s exports outside the continent, to non-extractive exports.
“The AfCFTA can assist Zimbabwe in pivoting away from extractive exports,” CTC said in a newsletter.
Figures from the International Trade Centre (ITC), show that Zimbabwe has great potential exports in agriculture, forestry and fishing; horticulture; and manufacturing, compared to mining and quarrying. These products include raw cane sugar, fish, black tea, oilcake of cotton seeds, peas, oranges, freezers of chest type, men’s ensembles, men’s trousers and shorts, ferrochromium and unworked industrial diamonds.
“Zimbabwe can export these products as intra-African trade increases largely due to the removal of tariff and non-tariff barriers to trade,” CTC said.
“Low-hanging fruits are in the agriculture and agro-processing sector . . . Production of agricultural goods is labour intensive and can also aid more employment creation opportunities especially for women and youth followed by the manufacturing sector.”
The advantage of trading manufactured products is that they can be less dependent on fluctuations of commodity prices such as those experienced for minerals, CTC said.
Wood products value chain
Wood is used for structural purposes in building and construction, transmission lines in the form of treated poles and furniture manufacturing.
Coniferous wood is used for making furniture and Zimbabwean wood has a reputation for good quality, thus of great export potential in the African region.
According to the ITC, coniferous wood sawn or chipped lengthwise, sliced or peeled, has actual export potential of US$2.3 million, actual exports are US$5.4 million and untapped potential remaining in individual countries is US$1.2 million. Markets with greatest potential for these products are South Africa and closest export links are with Zambia, CTC says.
Wood in the rough, treated with paint, creosote or other preservatives, has an export potential valued at US$4.2 million, while actual exports are US$5.2 million and untapped potential remaining in individual countries is US$1.3 million.
The country’s National Development Strategy 1 has strategies to increase forest production and processing, including managing woodlots, tree planting and increasing area under forest.
To enhance export of wood products, CTC said Zimbabwe can also focus on exports of fibreboards with many benefits and used in residential and commercial construction for low-slope roofing and soundproofing.
Furthermore, to enhance earnings Zimbabwe can also focus on wood furniture manufacturing for bedrooms and kitchens. Nations conducting rural electrification projects have a need for treated poles used for transmission lines.
The other advantage of wood products is that small to medium enterprises (SMEs) in the country can participate significantly in furniture manufacturing which can further help them in increasing revenue generation as they will not only focus on their Zimbabwean clients but also on the export markets.
Horticulture sector products
Black tea is a traditional export for Zimbabwe with untapped potential valued at US$2.1 million for packings greater than 3kgs, according to ITC. The CTC said markets with great potential for this local export of black tea are South Africa and Eswatini.
Notwithstanding the export potential of this product, exports are not easy as there is stiff competition from East African nations such Kenya, highlighting the need for robust marketing strategies for Zimbabwe’s black tea, the commission said.
Oranges, fresh or dried, are another horticultural product with untapped export potential of US$1.1 million. Markets with greatest potential for Zimbabwe’s exports of oranges are South Africa and Kenya.
“There is therefore a need to improve oranges production which is one of the outcomes of the agriculture sector in Zimbabwe. Value addition of oranges also has great potential as brands such as Mazoe Orange Crush are of high quality and can further penetrate the African region,” CTC said.
Zimbabwe can also export macadamia nuts, whose global demand is growing in major global markets. For instance, nuts which consist of macadamia nuts have less export potential of US$4 million into Africa, actual exports of US$5.1 million and untapped potential remaining valued at US$42.700, according to CTC.
“Zimbabwe has been exporting more nuts in shell compared to shelled nuts which results in less earnings from macadamia nuts,” it said.
Fish, whole or frozen, have export potential of US$3.8 million, actual exports of US$3.5 million and the remaining untapped potential is valued at US$636.800. Zimbabwe has options for export diversification of frozen fish filets into other African countries.
“There is scope to exploit fishing opportunities in other dams such as Tugwi-Mukosi to increase national fisheries production and reduce over exploitation of Lake Kariba. Strategies that can be pursued to increase fish trade include investing in cold chains and providing current market intelligence on regional markets to SME and large operators,” CTC said.
“This will provide information on appreciation of consumer preferences on the fish type and price trends for the different fish products in the African region.”
Manufacturing is a strategic sector driving economic transformation through increasing levels of productivity, competitiveness and innovation.
Freezers of the chest type have an export potential of US$1.7 million, actual exporters of US$1.6 million and untapped potential of US$498.000, according to CTC. Strategies to increase such exports, according to CTC, include manufacturing hybrid freezers which use both solar and grid power, thereby reducing appliance grid-tied electricity usage in the presence of load shedding and rising electricity tariffs.
Other household articles of iron have an export potential of US$1.3 million, actual exports of US$3 million and untapped potential of US$360.800.
Mining and quarrying
Data from ITC show that ferrochromium of carbon has export potential of US$11.2 million, actual exports of US$9.4 million and untapped potential of US$2.4 million.
On the other hand, unworked industrial diamonds have an export potential of US$1.2 million, actual exports of US$4.600 and untapped potential of US$1.2 million.
The CTC said trade opportunities for Zimbabwean products will be largely for non-extractive industries. This, therefore, calls for value addition and beneficiation of agricultural products so as to increase export earnings.
The sugar and the cotton to clothing value chains have great potential though they have distinguished characteristics of protected markets as there is heavy government intervention in these markets, including production subsidies and import barriers.
The commission said investment in value addition will transform Zimbabwe’s economic structure from one highly dependent on the export of agricultural raw materials and minerals, to an economy trading high-value processed goods.
In relation to the market for Zimbabwean products, CTC said its natural markets are those countries in the Southern African Development Community (Sadc) region followed by those in the Common Market for Southern Africa (Comesa).
“This speaks to the need to address the country’s infrastructure as a landlocked country, and transport logistics to northern, western and eastern Africa for the country’s exports,” CTC said.
“With the liberalisation of markets, there is a huge possibility that trading under the Sadc and Comesa blocs is likely to continue and expansion into other regions such north and west Africa may not be instantaneous.”