In pursuit of economic development, the Government has shifted from traditional to economic diplomacy, which is expected to improve foreign currency and investment inflows.
Here, the National Development Strategy 1 – launched last year – identifies economic diplomacy as being crucial to improving the country’s image, improve relations with the international community, as well as boosting boost and investment.
As part of this economic diplomacy, President Mnangagwa has been on a major drive to strengthen engagements with fellow African leaders, which is expected to improve bilateral trade ties.
For example, President Mnangagwa met his Malawian counterpart, President Lazarus Chikwera in October last year where discussions focused on how the two countries can harness their natural resources to improve the lives of their citizens through production and productivity.
This engagement afforded the two leaders and their Governments to refocus their cooperation in the areas of trade, agriculture, mining and social services.
Speaking during their meeting at State House in Harare, President Mnangagwa said Malawi and Zimbabwe should enhance private sector business exchanges and cooperation as well as cooperation between small and medium enterprises.
The President also rallied local companies to take part in trade exhibition taking place in Malawi.
“I challenge more Zimbabwean companies to equally participate at different expo’s hosted in Malawi including the Takulandirani Tourism Indaba, for mutual benefit.”
To this end, ZimTrade – the national trade development and promotion organization – is organizing a Solo Exhibition in Lilongwe, Malawi in the coming two months to improve the visibility of Zimbabwean products in the market.
The Solo Exhibition, which has been postponed from initial dates of 21-23 June in response to new coronavirus protocols in Malawi, will be held under the theme “kulimbikitsa ubale pamalonda”, meaning fostering trade partnerships between the two countries.
The event will improve engagements between companies in the two countries where local companies will meet buyers of products and services, as well as suppliers of raw materials.
Participating companies will be drawn from drawn from Fast-Moving Consumer Goods, Agricultural inputs and Implements, Household and Office furniture, and Building and Construction sectors.
Trade Between Zimbabwe and Malawi
Although good political relations exist between Lilongwe and Harare, there is room to translate this into economic gains by increased trade and economic cooperation.
According to the Trade Map, total trade between Zimbabwe and Malawi fell from US$126 million in 2015 to US$51 million in 2019 and the Balance of Trade (BoT) has been in favour of Malawi.
Zimbabwe’s main exports to Malawi in 2019 included corrugated paper and paperboard; coke and semi-coke of coal; cement; iron and steel structures; packing containers of paper, paperboard, cellulose wadding or webs of cellulose fibres; rough wood; agrochemicals; seeds, maize and fish.
Zimbabwe’s imports from Malawi include dried leguminous vegetables; soya-bean oil cake and other solid residues; unmanufactured tobacco; soya beans; groundnuts, maize, fibreboard, manufactured tobacco, and plastic household articles.
Malawi is a net importer and has been for over a decade, hence Zimbabwean companies have a unique opportunity to increase supplies to the country.
Some of the opportunities were identified through a market survey conducted by ZimTrade in Malawi in 2019.
The biggest opportunities were in the areas of agriculture inputs and implements, household and office furniture, building and construction, and Fast-Moving Consumer Goods.
To unlock these opportunities, Zimbabwean exporters leverage on Preferential Bilateral Trade Agreement that has been in place in 1995.
Exporters need to register through ZIMRA to benefit from this Preferential Bilateral Trade Agreement which allows for duty free trading on non-sensitive and non-exclusive products.
Both countries are also members of COMESA and SADC regional economic blocs, meaning that local exporters registered under trading agreements and awarded originating status under either or both blocs can export duty-free and quota-free from Zimbabwe to Malawi and vice versa.
Why consider Malawi as an export destination
Zimbabwe and Malawi have a homogeneous market.
The preferences of the consumers, their buying habits and the buying trends are the same.
The products that would have been accepted by the Zimbabwean market are therefore likely to find it easier to be accepted by the Malawian Market.
According to the 2019 market survey report, the products that have the greatest potential in Malawi include confectioneries, cordials, long life milk, powdered milk, chips, tinned foods, processed meats, and milk-based fruit juices among other products.
Zimbabwean companies also enjoy proximity to Malawi, which will likely strengthen the competitiveness of local products compared to competition.
Zimbabwe is at the central gateway to countries in the SADC region.
Her proximity to Malawi will reduce the logistics costs and hence improve price competitiveness compared to products from South Africa.
With regards to the business environment, which is one of the critical areas determining the success of Zimbabwean exporters, there is already an excitement from the Malawi business community to work with Zimbabwean companies especially in areas of agriculture development.
As Malawi is an agro-based economy, and the current thrust by its Government is on sustainably growing the sector to spur the economic growth of the country.
There are opportunities for companies in the agriculture inputs and implements to supply their products to this market whilst also forging business relationships in areas of skills and technological transfer.
The Zimbabwean companies have opportunities also to supply their products to the Malawi government agricultural input schemes.
The Malawi government is focusing on mechanizing the sector and hence companies supplying agriculture implements have opportunities in partnering the government and grow their business.
Further to this, the construction industry is growing representing enormous opportunities for players in this sector and allied industries such as the clothing industries to supply Personal Protective Equipment (PPE).
The most interesting aspect is that most construction businesses in Malawi is done by foreign firms and the construction materials are imported from different countries with South Africa and Zambia being some of the top sources.
Zimbabwean companies can tender to supply construction materials or supply their products through the distribution channels available.
Some specific products with vast opportunities in the construction industry include wheel barrows, ceiling boards, wooden boards, glue,locksets, aluminium door and window frames, cornices, roof tiles, rhinolite and rhinomould.
The building and construction sector has opportunities also for companies that offer services such as engineering, architectural and quantity surveying.
There are opportunities for collaboration in this sector which Zimbabwean companies should explore to grow their businesses.
In addition, there are no reputable furniture manufacturers in Malawi, and they are importing furniture products mainly from China and South Africa.
The furniture industry is dominated by small scale producers who do not have the capacity to supply the formal distribution channel. Furniture manufacturers in Zimbabwe are urged to grab this opportunity to supply both office and household furniture to this market.
Accessing the market
The success of any product in any market depends on the distribution channel used by the organization to reach its target customers.
The choice of the distribution channel is determined by the organization’s strategy.
Each of the distribution channel has its advantages and disadvantages.
However, to effectively reach the customers in the Malawian market, the main distribution channels to use to effectively reach the target customers include selling directly (opening own shop) and or selling through retailers, wholesalers, or distributors.
Online selling is still at its infancy stage.
One way to effectively reach a considerable number of potential customers is through exhibitions.
Exhibitions can also be an excellent way to make valuable network connections.