Zimbabwe’s manufacturing industry may be the biggest beneficiary of the Third Session of the Zimbabwe-South Africa Bi-National Commission (BNC) Summit held this week amid revelations Pretoria has given its blessings for Harare to maintain import tariffs on nearly 1000 product lines.
South African President Cyril Ramaphosa led a high-powered delegation for the BNC talks with Zimbabwe from Monday to Tuesday and his entourage included six ministers among them Finance Minister Tito Mboweni and International Relations and Cooperation Minister Lindiwe Sisulu.
In his official remarks at the BNC Summit on Tuesday the South African leader made a commitment that his country will render all support it can towards its northern neighbour’s economic turnaround efforts, including calling for lifting of restriction imposed by western countries.
President Ramaphosa-given that Zimbabwe is a significant trading partner of South Africa-also exhorted the country’s top leadership to improve the ease of doing business and remove trade barriers to grow the economy.
In response, his Zimbabwean counterpart-President Mnangagwa-said Harare was implementing far reaching reforms to create an environment that welcomes business, both domestic and foreign adding that to achieve its goals Zimbabwe needed help from friends like South Africa.
In an interview after the BNC Summit Industry and Commerce Minister Mangaliso Ncube, said Zimbabwe had sought permission from the Southern African Development Community (SADC) to maintain tariffs on 995 product lines.
He said South Africa agreed, during the Third Session of the Zimbabwe-South Africa BNC, to support Harare’s request to maintain import controls for a short period to allow some of its fragile industries time to recover.
This is despite the fact that the bulk of the products affected by import tariffs come from South Africa, which is Zimbabwe’s largest trading partner having exported 18 billion rand worth of goods to Zimbabwe last year.
Further, in 2016, 41 percent of all imports into Zimbabwe were sourced from South Africa and 79 percent of all Zimbabwean exports were destined for South Africa.
The concession by South Africa regarding the imposition of import tariffs on selected commodities follows earlier protestations on the issue by Pretoria since Zimbabwe had also not obtained derogation from SADC to impose the tariffs.
Zimbabwe had imposed tariff based import restrictions, including through Statutory Instrument 64 of 2016-later amended to SI122 of 2018. South Africa argued that the restrictions violated SADC trade protocols.
Both Zimbabwe and South Africa are members of the 14 member trade bloc.
But late last year Government temporarily relaxed some of the import rules on a number of products, including, cooking oil, laundry soap, sugar, rice, washing powder, body creams and crude soya bean oil following widespread shortages on the market coupled with massive price hikes.
Minister Ncube said on Wednesday that his ministry was happy with the progress the country had made in the area of trade following discussions held under the banner of the Third Session of the Zimbabwe-SA BNC.
“Quite a number of issues came into discussion some of which are still work in progress and we are quite excited about the progress we made. The first one was the issue of trade itself.
“We were able to agree with South Africa; (because) as Zimbabwe we (had) applied under SADC to continue to have our tariffs on about 995 product lines. (This comes as) we are trying to move, as SADC, towards removing tariffs. South Africa has promised that they will support us,” he said.
“We are also looking into concerns that they raised about certain products that they believe we are not producing, but we have put under import controls and again we have said we will look into that,” Minister Ncube said.
South African trade minister Rob Davies confirmed in South African media on Wednesday this week after the BNC Summit that following discussions on issues that made exporting to Zimbabwe difficult, a deal had been reached, including scrapping of 29 tariff lines out of 112 tariffs.
“We discussed some of these issues and we were able to strike a deal to do away with some of the issues, 29 tariffs to be exact,” Minister Davies was quoted as saying in South Africa’s Business Day newspaper, although he further indicated that some of Pretoria’s trade concerns remained.
The import tariff restrictions have, however, paid dividends for Zimbabwe with industrial capacity, according to Confederation of Zimbabwe Industries (CZI), rising from around 20 percent when the restrictions were introduced in 2016 to an average of 47 percent by September 2017.
Several food processing industries such as Zim Gold, Cairns, Nestle Zimbabwe and Delta Corporation registered significant increase in production levels, which helped some of the firms to avoid collapse or closure.
The restrictions followed vigorous lobbying by the local manufacturing industry, which argued it had capacity to produce the goods, but was facing stiff competition from grossly discounted imports.
Zimbabwean firms need billions of US dollars to rebuild antiquated infrastructure, replace machinery and equipment to restore competitiveness through adopting the latest technologies, which have not been able to do after being battered by nearly two decades of economic meltdown.
SA to return to ZITF
Minister Ncube also said they had discussed with their South African counterparts the issue of Zimbabwe’s biggest premier trade exhibition, Zimbabwe International Trade Fair (ZITF) where Pretoria has not participated in the last two years.
“They have also committed to this year’s edition but after discussing with them and feeling that there is renewed spirit of increased trade the minister promised that they will be engaging their business community immediately when the land in SA,” Minister Ncube said.
Tied to that the two countries deliberated on efforts to promote value chains and an agreement has been reached to identify a minimum of six value chains to start with in order to develop competencies around them.
The arrangement will entail either Zimbabwe outsourcing raw materials from South Africa or Pretoria outsourcing raw materials it requires from the Zimbabwean market for value addition. “It’s just a target that we have set and our teams are working on those.”