By Allan Majuru:
In pursuit of economic development, the Zimbabwe Government has shifted from traditional to economic diplomacy, which is expected to improve foreign currency and investment inflows.
On this front, the country economic blueprint, the National Development Strategy 1 — launched last year — identifies economic diplomacy as crucial to improving the country’s image, expanding relations with the international community, as well as boosting investment.
As part of this economic diplomacy, President Emmerson Mnangagwa has been on a major drive to strengthen engagements with fellow African leaders.
For example, he met with his Malawian counterpart, President Lazarus Chikwera, in October last year, when 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 allowed 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, Mnangagwa said Malawi and Zimbabwe should enhance private sector business exchanges and cooperation, in particular small and medium enterprises.
The President rallied local companies to take part in trade exhibitions in Malawi.
Trade between Zimbabwe, Malawi
Although good political relations exist between Lilongwe and Harare, there is room to translate this into economic gains through increased trade and economic cooperation.
According to Trade Map, total trade between Zimbabwe and Malawi fell from $126 million in 2015 to $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 and paperboard; cellulose wadding or webs of cellulose fibres; rough wood; agrochemicals and seeds; as well as maize and fish.
Zimbabwe’s imports from Malawi include dried leguminous vegetables, soya-bean oil cake and other solid residues, unmanufactured tobacco, soybean, groundnuts, maize, fibreboard, manufactured tobacco, and plastic household articles.
Malawi is a net importer, 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 the Preferential Bilateral Trade Agreement that has been in place since 1995.
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.
Zimbabwean companies also enjoy proximity to Malawi, which will likely strengthen the competitiveness of local products.
Zimbabwe is at the central gateway to countries in the Sadc region.
Her proximity to Malawi will reduce the cost of logistics, 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 excitement from the Malawi business community to work with Zimbabwean companies especially in areas of agriculture development.
Malawi is an agro-based economy, and the current thrust by its government is on sustainably growing the sector to spur economic growth.
There are opportunities for companies in the agriculture inputs and implements sector to supply their products to this market whilst also forging business relationships in areas of skills and technological transfer.
Zimbabwean companies have opportunities also to supply their products to the Malawi government’s agricultural input schemes.
The Malawi government is focusing on mechanising the agriculture sector, hence companies supplying farming implements have a lot of potential opportunities.
Further to this, the construction industry is growing, representing enormous opportunities for players in this sector and associated industries such as the clothing industries to supply personal protective equipment.
The most interesting aspect is that most of the construction business in Malawi is done by foreign firms and the materials are imported from different countries with South Africa and Zambia topping the list.
Zimbabwean companies can tender to supply construction materials or supply their products through the available distribution channels.
Some specific products with vast opportunities in the construction industry include wheelbarrows, 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 that 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 cannot 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 organisation to reach its target customers.
The choice of the distribution channel is determined by the organisation’s strategy.
Each of the distribution channels 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.
*Allan Majuru is the CEO of ZimTrade.