ZIMBABWEAN exporters must scramble to find new markets or risk commercial peril after South Africa slapped an effective import ban on a raft of products in a bid to protect local producers.
South Africa is Zimbabwe’s leading market, accounting for about 56 percent of all exports with China and the United Arab Emirates coming a distant second at 6 percent.
However, under a deal agreed between the government, labour and business organisations, at least 75 percent of all procurement in Africa’s largest economy must now come from local companies.
“The development is likely to have an impact on Zimbabwe’s external sector due to the fact that South Africa remains the major trading partner with Zimbabwe,” the Ministry of Finance warned in its latest monthly economic review.
The regulations, which also come with thresholds for minimum local content in the targeted products and services, took effect on December 7, 2011.
However, products that must immediately satisfy the local content requirements such as clothing, textiles, and leather products are not among Zimbabwe’s key exports to its southern neighbour.
“The clothing, textiles, footwear, leather products industries are in decline, with little room for exports. The canned vegetable market is also constrained,” Zimbabwe’s treasury bulletin added.
Exports to South Africa mostly comprise unprocessed tobacco (13.5 percent), minerals (over 36.8 percent) and sugar (2 percent), which are not on the list.
Even so, the treasury warned that there was still “potential for reduced exports” as more products would be added to the initial list.
Exports are, however, still expected to grow 15.3 percent to US$5.1 billion in 2012.
With imports set to top $6.8 billion, the country’s current account deficit is now projected to ease to US$1.7 billion against US$2 billion for 2011.