Regional markets provide soft landing for exporters
The coronavirus pandemic affects more people across the world, restricting movement of persons and cargo has been the most viable option for many countries.
HOWEVER, these measures make it difficult for local exporters, particularly small businesses to continue supplying products and services outside the country.
The pandemic has disrupted international trade in terms of volumes and commodity prices. This will result in significant negative impact on small and mediumsized businesses.
Without access to markets, some local companies will struggle to remain in business in light of continued overhead expenses not covered by sales or profits.
Hence, regional markets can cushion local companies as they remain easy to access compared to international markets.
This is because most countries in the region have remained open to trade, although emphasis has been on strategic products.
To stay afloat during these difficult times, local companies must have a strong understanding of the regional markets, especially on current measures adopted to stop the spread of coronavirus as most of these affect trade.
Understanding these measures means local companies are better equipped to know where to place their products and in some cases, they will have to adjust their export strategy to ensure that they “grab” some opening markets.
Zambia
Zambia is one of the strategic markets that should be easy to supply even for first time exporters. This is anchored on several advantages that include proximity to the market.
At the same time, Zambia and Zimbabwe share almost the same taste in products, hence little investment is required in establishing a strong presence.
Zambia has instituted measures to curb the spread of the virus. These include restricting gatherings such as conferences, weddings and other meetings.
With regards to the economy, indications are that economic activities will slow down during the year, with tourism, mining, manufacturing, construction as well as wholesale and retail trade sectors projected to slow down on account of the pandemic.
Given the lockdown announced by South Africa, imports from that country are expected to decline in Zambia, with direct adverse impact on wholesale and retail trade, manufacturing and mining.
For Zimbabwean businesses, the lockdown in South Africa should provide an opportunity to seize the market and fill the void that has been created.
Currently, only imports of essential products feeding into Covid-19 response activities are given priority at border entry points whilst the rest are cleared at the discretion of Zambia’s revenue authority.
Food supplies into retail sector are also given priority as the absence of South African products has created a gap. Local companies should capitalise on logistical advantages that make it easy to supply a cheaper product in Zambia.
The low hanging fruit where local companies can seize the market is the Fast-Moving Consumer Goods (FMCG) and mining sectors, where Zimbabwean businesses already have competitive products and services.
There is also demand for medical supplies and services, personal and healthcare products and services, information and communication technologies, and e-commerce.
Demand has gone down in sectors such as education, automotive, construction and real estate, manufacturing, tourism and leisure as well as aviation.
To provide relief to businesses, Zambia suspended import duty on the importation of concentrates in the mining sector to ease pressure on that particular industry. Excise duty on imported ethanol for use in alcohol-based sanitisers and other medicine-related activities was also suspended.
The Zambian government also removed provisions of Statutory Instrument 90 relating to claim of VAT on imported spare parts, lubricants and stationery to ease pressure on companies.
These measures are expected to increase imports in some areas such as hand sanitisers. Local companies have a shot at establishing a strong presence in Zambia.
Botswana
Botswana is largely an open market economy. The business environment is highly facilitative of trade and investment for both local and foreign players.
The retail sector in Botswana is largely dominated by South African brands and just like Zambia, the lockdown in South Africa will impact on supplies, hence opportunities for local businesses to seize the market.
Botswana’s Francistown, which is closer to Zimbabwe than the capital Gaborone, can be used as an entry into the market.
However, local businesses need to be strategic in their approach as Botswana has come up with relief measures for business. They have also imposed stiff measures to curb the spread of Covid-19.
Botswana introduced restrictions on travel and people movement with the aim of suppressing the spread of the virus.
The country has also imposed restrictions on passage of raw materials. Importing companies in Botswana are required to consult the Botswana Investment and Trade Centre (BITC) to understand the raw materials they can import.
This is the same with exporting of essential products such as hand sanitisers and face masks where the exporting company should consult with BITC. These restrictions have a negative impact on economic activity, particularly on demand and supply of products and services.
To reduce the impact, Botswana has established a Covid-19 relief fund, which provides financial resources to cater for the procurement of national relief supplies and national publicity outreach programmes.
The fund also covers relief of selected industries, public counselling centres, additional staff to support health professionals and an economic stimulus package post Covid-19 pandemic.
Areas identified by the fund provide opportunities for an array of products and services for Zimbabwean businesses. In the medium term, Botswana is also looking to upscale production of horticultural produce, promote market centres for agricultural produce as well as capacitate the National Agro-processing Plant (NAPRO) to absorb all excess production of vegetables.
These activities will open opportunities for Zimbabwean players in the agriculture supply chain, particularly suppliers of seeds.
Namibia
The Namibian market is one of the most strategic regional markets that local producers are yet to fully exploit.
The good relations between Harare and Windhoek have made it easy to trade and local businesses can take advantage of the Southern African Development Community (SADC) Trade Agreement and the Zimbabwe-Namibia Preferential Trade Agreement, which offers preferential treatment of qualifying products to increase exports to the country.
With regards to Covid-19, movement of people in Namibia is restricted as the country is currently under lockdown. Currently, the market is slow as most institutions are closed, which has seen demand for several products and services go down.
The construction and mining sectors have been affected and demand for products has gone down, with most retailers closing shop. Thus, local businesses that were supplying these sectors may need to diversify products and services so that they remain in the market.
The FMCG sector is one area where local businesses can target to increase supply once the lockdown has ended. Currently, Namibia’s Agro-Marketing and Trade Agency is not importing but is looking at the fruits and fresh produce price list for post Covid-19 considerations.