Is it a coincidence that Zimtrade is driving Zim SME expansion into Zambia? The simplest answer is no. There are no coincidences in business, only planned and strategic moves.
Let’s explore how and where this might be coming from and why Zambia.
First of all, Zimbabwe and Zambia are like Siamese twins, birthed during the federation of Rhodesia in the 1950s and separated at the end of the Eco-political arrangement that saw the birth of great economic investments that the two countries are still benefitting from to date. Maybe herein lies the reason why it, makes sense for Zim businesses to increase their footprint across Zambezi.
Speaking of the Zambezi, along that same river lies one of Africa’s biggest economic investments, the Kariba power project, the same plant that is powering the two countries’ economic activities.
Zim trade might be on to something here.
Earlier this month, about 25 Zimbabwean companies participated in the 95th edition of the Zambia Agricultural and Commercial Show trade show held under the theme, “Inclusive Economic Transformation”. The participation was organized by the national trade development and promotion organization, ZimTrade, as a move to drive Zimbabwe’s exports into Zambia.
It seems the move bore some fruits if what Zimtrade said in media reports is anything to go by. The organization told local media that Zambian buyers showed interest in agriculture products, protective clothing, furniture and the services sector.
In 2019, companies such as Kefalos Foods, a Zimbabwean dairy products producer and Associated Foods Zimbabwe (Pvt) Ltd made inroads into this burgeoning market. Kefalos Foods, for example, in just three months since it started exporting its range of cheeses and yoghurts into Zambia in the same year, was now distributing to over 20 supermarkets mainly at Shoprite and Pick n Pay retail stores.
We just decided to pick one example here but the same has been happening from as far back as 2011.
Statistics demonstrate that trade between the two neighbours has been on an upward trajectory with Zimbabwe’s exports to Zambia having grown by 54 per cent from US$58 million in 2017 to over US$90 million in 2022.
Whether or not this is a result of the factors mentioned above is a story for another day.
So, back to that history recap.
Zimbabwe and Zambia’s relationship dates back to the Federation of Southern and Northern Rhodesia. Under this agreement a lot of trade and partnership treaties we signed. The federation lasted from 1953-1963, with trade being run through the central government. The arrangement, according to critics benefited Southern Rhodesia (Zimbabwe) at the expense of Northern Rhodesia (Zambia).
The point, however, is that the merging of these two countries at the time created strong relations and economic ties that can still be exploited to enhance trade in the modern day. A reality ZimTrade seems to understand hence their push to expose Zimbabwean companies to the Zambian market.
Some significant trade agreements between Zimbabwe and Zambia
Zimbabwe and Zambia have continued to seek ways of growing their trade relations and improving business between the two countries. In 2009 Zim and Zambia pursued this economic relationship which saw the establishment of a one-stop border post at Chirundu to facilitate trade between the two countries and save about $486 million a year in logistical costs.
Another notable bilateral agreement meant to bolster trade between the two countries was the Memorandum of Understanding to implement a joint industrialization project spearheaded by COMESA. The Joint Industrialization Project was meant to promote self-sustained, balanced and inclusive economic growth between the two countries. The MOU’s aim was to provide opportunities for the private sector to benefit from the African Continental Free Trade Area through enhanced competitiveness.
This came against the backdrop of Exports from Zimbabwe to Zambia having increased at an annualized rate of 0.4%, from $82.2M in 1995 to $91.2M in 2021.
In the same period, exports from Zambia to Zimbabwe increased at an annualized rate of 6.53%, from $39.5M in 1995 to $205M in 2021.
In 2021, Zimbabwe exported $91.2M to Zambia. The main products exported from Zimbabwe to Zambia were Coke ($15.3M), Coal Briquettes ($8.65M), and Plastic Lids ($5.93M).
Zambia exported $205M to Zimbabwe. The main products that Zambia exported to Zimbabwe were Cement ($35.3M), Corn ($17.6M), and Oil Seed Flower ($14.4M). In 2022 Zimbabwe Exports to Zambia stood at US$90.01 Million, according to the United Nations COMTRADE database on international trade.
What do the two countries have to offer each other?
A wealth of possibilities await companies on both sides of the border, as recent information indicates significant potential for growth and business opportunities. There is a diverse market to tap into, especially for Zimbabwean companies, covering mining and agriculture. Economic analysts are of the agreement that Zambia is emerging as a key trade destination as there is an appetite for Zimbabwean products.
This presents opportunities for local companies to supply personal protective equipment, mining equipment, and mining consumables, as well as other vital services such as transport, plant maintenance, engineering, environmental management, and security.
Additionally, as both Zimbabwe and Zambia have ratified the COMESA and SADC trade agreements, Zimbabwean companies enjoy access to the Zambian market at favourable tariff rates. A market survey by ZimTrade highlights the potential for Zimbabwe to supply processed foods and services to meet the needs of the Zambian market. In fact, some local companies are already making headway by offering better quality products than their competitors.
With plenty of possibilities for Zimbabwean businesses to spread their wings and enter into new markets, seems companies are waking up to the reality that now is the time to take advantage of the opportunities offered by the booming Zambian economy.
