The coronavirus-induced global lockdown negatively affects Zimbabwe’s exporters in the short- to medium-term period as it is beginning to take a toll on business.
For those that are manufacturing, some have reduced output due to downtime while other are facing disruption in sourcing of raw materials, especially those that are imported.
With regards to exporters, some local enterprises are not able to transport their products as they did a few months ago as travel and other border restrictions are affecting their ability to supply products as well as meet with buyers.
Currently, some buyers who had placed orders, especially for horticultural produce, are being forced to cancel transactions because demand has dropped significantly in their respective markets.
The players in floriculture indicated that the peak period of flowers exports is from February to May hence they were now at the peak period and this has been a huge loss to the farmers.
Demand for non-essential products such as flowers in Europe – which is the largest importer of Zimbabwean flowers – has been reduced.
Confronted by such a reality, it is important to note that actions by local exporters during this crisis period will determine their relevance on the global market post the coronavirus (COVID-19) period.
What is needed is to refocus priorities and concentrate on areas that will make it easy to meet demand, which is projected to grow once borders begin to re-open.
Monitoring export markets
COVID-19 has destabilized markets, which are increasingly becoming inconsistent with regards to requirements and needs.
There is high potential that some markets will emerge bruised and battered after the global pandemic and it is crucial for local exporters to closely monitor trends on the global export market.
Currently, ZimTrade, the national trade development and promotion organisation, is monitoring global markets, engaging other trade promotion organisation and liaising with buyers.
The market intelligence generated from these engagements is expected to assist local companies in coming up with post-COVID-19 export strategies.
For example, there are some products whose price has gone very high because they are in demand and a few manufacturers are supplying.
These include medical supplies and some foods that are considered superfoods because they contain high nutrients and are low in calories.
Low demand of some products and services has had to force prices for some products to fall drastically, especially those that are not a basic need during the global shutdown.
Arguably, products such as flowers have been affected in most countries.
However, after borders re-open, it is likely that the current state of markets will start to change, with some product prices going up whilst others falling.
At the same time, tastes in some markets are likely to change forever as more people have had to stay longer periods at home than before.
In some markets, consumers seem to be going for products with long-shelf life, including fruits and vegetables.
Projections are that social distance will likely change perceptions on some products and services, which will affect supply and demand.
Packaging will also need to be adapted to make sure that people feel safe when they purchase produce.
Some produce used to be sold without packaging so that customers can have a feel before they buy but with the health risks that this now poses, a lot of innovation should come into effect.
Due to longer periods without access to some products and or services, some consumers are realizing that they can do without them, which undeniably will affect demand.
Understanding these dynamics will therefore enable local manufacturers and exporters to come up with viable strategies that will ensure that they remain relevant through sustainable innovations.
What this means is that creating products now, based on high price on markets might be risky for products, especially those that are usually in high demand during open seasons.
Constant monitoring of markets will allow local manufacturers to place their dollar where they can get the best value.
Focusing on regional markets
Although international markets will be difficult to supply, regional markets will provide a soft landing for local exporters.
This is because most countries in the region still allow for cargo to pass and with simplified logistical arrangements, local exporters can easily supply these markets.
Local exporters can also leverage on regional and continental trade agreements such as the African Continental Free Trade Area (AfCFTA), Common Market for Eastern and Southern Africa (COMESA) and Southern African Development Community (SADC).
According to Wamkele Mene, recently elected as the first Secretary-General of the AfCFTA, “Africa should not despair and fall into despondency. From a trade perspective, we should see this crisis as an opportunity – through the AfCFTA we have an opportunity to reconfigure our supply chains to reduce reliance on others.”
For this to succeed, local manufacturers need to tailor-make some products so that they are easy to sale in the African market, which is not always the same as the European and Asian market.
Some businesses will not continue to operate normal as there is potential that some products will not reclaim some markets, hence need for exporters to start considering product diversification.
Putting “all eggs in one basket”, particularly during these times will increase risk on some products.
This is because there is a possibility that some consumers will drop some products from their list as a result of the lockdown, especially those they consider to be expensive.
Product diversification has for long been recognized as one of the ways for local exporters to earn more on the export market.
The lockdown will usher in new habits and trends worldwide which need to be investigated.
The hygiene and sanitation culture might be a new thing for people and manufacturing companies can capitalize on that for example protective clothing manufacturers can consider face masks and hand gloves as part of their product offer.
Detergents and household cleaning manufacturers can include the sanitizers in their product range.
Processed foods manufacturers can seek to diversify to products with vitamin C or products that boost immune system such as fortified foodstuffs.
Thus, this period offers a unique opportunity for exporters to experiment on some products, which will cushion them from possible shocks that might take place in their main products or services.
Research will need to be conducted to ensure that they diversify on lines and products with quick- wins.
Capacitating manufacturing industry
There is potential for Zimbabwean products to emerge as the highest quality in the world after this lockdown.
To easily achieve this, all stakeholders must play a part in improving product quality.
One of the areas needed for attention is financial support as this will ensure that local companies do not collapse during the lockdown.
Banks and other financial institutions must make it easy for firms to access loans for acquiring raw materials to meet demand on orders.
On the other hand, Government can offer non-monetary incentives that can cushion local manufacturers from the global shocks.
This may include tax-free quotas for companies that are exporting so that the country can easily attract the much-needed foreign currency.
It is encouraging to note that this has been achieved partially with the suspension of retention period and possible reduction of interests and charges.
There is further need for establishment of more special economic zones – in the context of districts and or towns – as this will create an enabling environment for local companies to export and also improve livelihoods of people especially in remote areas.
Further to this, local manufacturers must focus on retooling as part of their Industry 4.0 transformation initiatives as this will cushion them from impacts of COVID-19 and any possible future pandemics.
What COVID-19 has demonstrated is that industries that are more mechanized are not affected in the same way as those that are not.
To demonstrate this, in light of risks posed by COVID-19, a company that employed 100 people in their packaging process will be forced to reduce production as more people will not be able to travel to work and/or it will be expensive to transport staff to and from work.
On the other hand, a company doing the same job but with two people operating automated machines will likely continue to operate and deliver same output as it has less risk of spreading COVID-19 and is cheaper for them to coordinate workforce.
Thus, local manufacturers should take lessons from the pandemic and mechanise their processes, which will also impact on quality of products.
Keeping strong contact with buyers
Whilst most companies will not be exporting, some still have pending orders and deals which will need to be completed once markets and borders re-open.
As part of its service to the business community, ZimTrade is in constant touch with buyers on their list and is ready to assist companies who may need to contact buyers in regional and international markets.
At the same time, it is important for local companies to maintain contacts with their buyers, assuring them that they still have capacity to supply and sustain operations.
This will ensure that local exporters do not create a vacuum in their traditional markets.
With most countries encouraging people to stay indoors, virtual meetings have become the most practical approach and option for businesses.
ZimTrade is working on an online platform that can assist buyers and sellers to meet to source products from Zimbabwe
At the same time, local companies must build and strengthen their online presence as potential buyers are turning to the internet to look for potential suppliers.
The online platforms should be fully equipped with product information, responsive contact details, accessible call to action tabs and payment options.
By establishing online presence, local companies increase chances and reduce cost of connecting with customers from across the world, thus improving on brand visibility.
Presence on the virtual world also creates better sales platforms and enhances conversation during the sales funnel as well as increase reach, direct marketing and online responsiveness.
Local manufacturers should also take opportunities to conduct researches on the changing market requirements so that they continue to export products and services required by the market.
Publish Date: Sunday 05 April 2020