Zimbabwe’s economy is on a rebound, with exports taking a center stage in the country’s foreign currency earnings.
Recent figures from ZimStat shows that the country’s export earnings recorded a 39 percent growth between January-April this year, compared to the same period last year.
For the export-anchored economic growth to be sustainable, President Mnangagwa’s Government, through the National Development Strategy (NDS1), has since identified value addition and beneficiation as critical key link to structural transformation.
However, value-addition, especially for export related products, needs to be structured, ensuring that local companies take part in strategic products and regional value chains.
As local companies increase value addition, they must integrate into regional value chains, riding on the country’s competitive and comparative advantage.
Already, NDS1 has identified quick win value chains for development, including agro-based value chain; pharmaceutical value chain; and bus and Truck assembly value chain.
Iron and steel and general engineering value chain; and plastic waste value chain are also identified as offering quick wins for Zimbabwe.
Taking part in these value chains identified by NDS1 could be a starting point for companies that are looking to position themselves at strategic points along regional value chains.
As this column last week discussed the key benefits for participating in regional value chains, what is perhaps important is identifying some of the specific regional value chains that are low hanging fruits for Zimbabwean companies.
Regional value chains
The Regional Indicative Strategic Development Plan (RISDP) 2020-2030 of the Southern African Development Community (SADC) identifies prioritizing value chain approach as as an enabler to industrial development.
Already some of the regional value chains being developed in several SADC Member States under the Support to Industrialisation and the Productive Sectors in the SADC Region (SIPS) programme include agro-processing, pharmaceutical, and leather.
These are sectors that have huge potential to facilitate for job creation, infrastructure development, and improved productive among other benefits.
Zimbabwe already enjoys competitive advantage in these areas and these sectors speak to sectors identified for value chain development under the NDS1 period.
For example, under NDS1 period, priority on agro-processing value chains will be development of soya bean value chain; fertiliser value chain; cotton value chain; sugar cane to fuel value chain; dairy value chain; and leather value chain.
Leather value chain
The leather value chain is a low hanging fruit given the country’s competitive advantage in livestock production and abundant wild animals for exotic leather under controlled production.
Zimbabwe boasts of good quality leather and the United Nations Conference on Trade and Development (UNCTAD) states that the country has more leather outputs compared to other countries in the region.
Thus, with strategic position in the regional value chains, the leather sector has potential to set the country on a positive path towards sustainable economic growth, employment generation and poverty reduction.
The country’s diverse selection of leather ranges from domesticated bovine to the African buffalo found on the wild escarpment, which could earn the country more if it specializes in manufacturing leather products.
Already the country is earning from exports of raw and processed leather, but there is potential to export much more if manufacturing is centralized in the country.
UNCTAD states that Zimbabwe has potential for exports of products such as footwear, seats, trunks, suitcases, vanity cases, executive cases, briefcases, school satchels, spectacle cases, and binocular cases.
Other leather products with potential for export from Zimbabwe are camera cases, musical instrument cases, gun cases, holsters and similar containers, travelling bags, insulated food or beverages bags, and toile.
Although manufactured products offer best wins for the country, there are also opportunities for local companies to position themselves as processors of raw leather, getting supplies from countries such as Botswana.
The current tanners, who represent small-, medium- and large-scale players produce wet blue and finished leather.
These tanners can supply countries in the region for further processing products such as tanned or crust hides and skins of bovine and wild animals (exotic leather), and leather further prepared after tanning or crusting.
As a way forward, there is need to address constraints affecting producers of leather and leather products in Zimbabwe, so that they can effectively participate in regional value chains.
For example, the sector is dominated by mostly small to medium enterprises and, therefore, there is a need for assistance in production techniques so that they can improve the quality of their products, especially focusing on finishing and stitching.
Agro-processing value chain
Zimbabwe’s agricultural sector, which is the backbone of the economy, offers huge export opportunities to supply an array of inputs and implements across the region.
This is because when compared to other countries in southern Africa, Zimbabwe’s agriculture sector is better developed and positioned to offer requirements for countries that are still growing their agricultural capacities.
One of Zimbabwe’s competitive advantages is production and supply of different seeds into regional markets, especially those that are growing their agriculture sector – such as Malawi, Democratic Republic of Congo, Tanzania, and Namibia.
Over the years, Zimbabwean companies have mastered the production of quality consumer goods, that are highly sort in the region.
Relying on agricultural supplies from countries such as Zambia, and South Africa, the country has potential to be a leading supplier of processed foods in the region.
Products that can be produced, with supplies from countries in the region include confectioneries, cordials, cooking oil, snacks, long life milk, powdered milk, chips, tinned foods, processed meats, milk-based fruit juices among other products.
As production is enhanced, local businesses have a huge potential to competitively supply processed foods to regional markets such as Zambia, Botswana, Democratic Republic of Congo and Malawi, riding on bilateral and multilateral trade agreements.
Further to this, Zimbabwe is endowed with a conducive environment and climate for the growth of a niche set of wild fruits and traditional herbs that hardly grow in other parts of the world.
Zimbabwe has vast wild fruits ranging from mauyu (Baobab), masau (Ziziphus Mauritania), matohwe (Azanza garckeana), and natural herbs including zumbani (Lippia Javanica), Muhacha (Hissing tree) and moringa.
These wild fruits and herbs can go through value addition, packaging, and branding that can make it easy for exporters to earn more.
To tap into the regional value chain, Zimbabwean manufacturers need to address their competitiveness.
In this rapidly changing environment, there is need to upgrade technological and human skills to boast their performance and competitiveness.
Investment in key areas such as research and development will also make it easy for producers to continuously improve their products in line with consumer tastes.
Pharmaceuticals value chain
Zimbabwe currently exports pharmaceutical products to regional markets and has potential to increase its market share if it increased production.
Here, the strategic position for the country is in production, riding on research and developments that can be done in other SADC countries.
Under the NDS1 period, the Government has committed to increase the number of locally produced essential medicines, increase proportion of companies complying with international World Health Organisation as well as reduce the medicines import bill.
Increased production, coupled with more players in the pharmaceutical sector complying with international standards is going to improve the sector’s competitiveness, which in turn will make it easy for locally manufactured products to perform in regional markets.
Apart from potential in production of pills, there are opportunities for local companies to position themselves as leading producers of products such as personal protective equipment, mosquito nets, and medical equipment.