AGRIBUSINES PERSPECTIVE: Zimbabwe and SA could benefit from import substitution
The spirit of political change is sweeping across the streets of Zimbabwe, albeit together with lingering economic underperformance. It is therefore worth looking at which agricultural products Zimbabwe imports in large quantities and whether import substitution would be a possibility in the short to medium term.
Import substitution would not only improve the country’s trade balance, but also bring much-needed job opportunities. In 2016, Zimbabwe spent US$1,04 billion (about R15 billion) on agricultural and food imports, up 5% from the previous year. According to data from Trade Map, nearly a third of this import bill was due to maize imports, with soya bean oil and rice accounting for 12% and 11% of the overall import bill, respectively.
The other notable products the country imported included wheat, milk, palm oil, sugar, animal and vegetable oils, pasta and bottled water, among other commodities.
In the case of rice, Zimbabwe’s reliance on imports is not a unique phenomenon, as South Africa also imports all of its rice. The key reason is that South Africa and Zimbabwe are not agro-ecologically endowed for rice production. However, Zimbabwe could become self-reliant in the case of other food products or commodities, such as maize, wheat and soya bean, among others, if favourable and stable policy conditions were established. After all, Zimbabwe was once self-sufficient in the production of maize (not to be confused with being a “breadbasket”, as Zimbabwean politicians have incorrectly claimed in the past).
If we look at the country’s maize data for the two decades prior to Robert Mugabe’s presidency, from 1960 to 1980, Zimbabwe’s maize production outpaced consumption by an average of 400 000t/year, making it a net exporter. This continued into the first half of Mugabe’s rule, from 1980 to 2000, albeit with a gradually declining maize trade balance. Wheat presented a somewhat similar trend, before the drastic decline in production from 2001. Since then, Zimbabwe’s agriculture sector has collapsed largely due to ill-conceived land reform policies. The country has remained a net importer of the commodity.
The countries that have been key suppliers to Zimbabwe in the recent past are South Africa, Zambia, Mauritius, Mozambique, Malawi, Thailand, the UK, the US and China. In value terms, about half of 2016’s US$1 billion (R14,4 billion) imports originated in South Africa. I highlight this not only because of its magnitude, but to make the point that agro-ecologically speaking, products that are produced in South Africa can generally also be produced in Zimbabwe.
While Zimbabwe addresses its land reform setbacks, the agriculture ministry should take advantage of South Africa’s agricultural capabilities. This could be done by either collaborating on development projects, or incentivising South African agribusinesses to open operations in Zimbabwe and promote skills transfer between South African and Zimbabwean farmers. I mention this cognisant of the financial liquidity issues in that country, but assuming that over time, things will be resolved.
most commodities produced in sa can be produced in zimbabwe
Boost the trade balance
An improvement in the Zimbabwean agriculture sector would not only boost its trade balance, but also improve livelihoods.
Data from the World Bank show that Zimbabwe’s agricultural employment as a percentage of total employment was at 67% in 2014. So an improvement in agricultural yields would have far-reaching positive spin-offs.
Over time, the other industry the Zimbabwean authorities need to think about is agro-processing. To this end, there is a lot that can be learnt from South Africa and the technology it uses. Cross-border knowledge sharing is critical to Zimbabwe’s efforts to rebuild itself after decades of ill-conceived policies.
Agribusiness perspective by Wandile SihloboWandile Sihlobo is head of economic and agribusiness intelligence at Agbiz. Email him at [email protected]biz.co.za.