Current Trade News

Zimbabwe Stock Exchange-listed paramount producer of piping material, Proplastics, has finally completed its factory, with the plant expected to start operating by the end of the third quarter after the completion of pending minor electric works.
The firm manufactures a variety of piping products for usage in mining, agriculture and infrastructure development.
"The new factory construction work is largely complete except for a few remaining electrical works. Focus is now shifted on making the plant operational by the end of the third quarter. As envisaged when the Group embarked on this project, we expect operational efficiencies to improve with the migration to the new factory, thus driving down unit costs.
"In this regard, a more stable supply of electricity is vital in order to ensure export competitiveness and we will engage relevant authorities in order to seek a solution to this critical issue," said company Chairman Gregory Sebborn in a statement accompanying the company's half-year financials to June 30, 2019.
The new factory project was initially earmarked to be completed by the first quarter of 2018 but foreign currency shortages threw spanners into the works resulting in the about US$5 million project failing to be completed within the targeted timeframe.
The project is designed to boost the company's production capacity as well as enhancing its export competitiveness through factory efficiencies and economies of scale should electricity supply be stable. Earlier reports had indicated the new factory will see production capacity mounting from about 8000 tonnes to 32 000 tonnes per annum.
Meanwhile Proplastics manoeuvred through an "extremely challenging operating environment to post an 87 percent boost in revenue to $20,1 million compared to $10,7 million posted in the prior year comparative.
The boost, however, has come amidst a decline in production volumes by 28 percent compared to the previous year. The company managed to compensate the volumes decline with cost containment to 16 percent despite inflationary pressures.
Growth in revenues translated to a boost in gross profit to $11,6 million compared to the prior $3,4 million, more as a result of contained cost of sales. Profit after tax at $5,4 million compared to $1,2 million achieved in the prior period was commendable.
The financial positives were highly commendable despite an upsurge in overheads and financing costs.
"Overheads increased by 156 percent due to the inflationary environment and financing costs went up by 144 percent driven by costs in establishing new facilities with the banks and interest on lease liability arising on initial application of International Financial Reporting Standards," said Mr Sebborn.
Going forward, the piping concern is hopeful the interbank market will grow to meet its foreign currency requirements. However, short-term demand is expected to remain subdued within a challenging economic environment.

The country's trade promotion body, ZimTrade has asked Government to decentralise the issuance of export permits as part of the latest round of Ease of Doing Business reforms.
ZimTrade manager for export development Mr Tatenda Marume said such a move was in tandem with Government's drive towards devolution.
"A critical issue is the decentralization of permits. In the spirit of devolution, some of our exports have already been devolved because if you look at it, areas like Chipinge are strong in terms of horticulture.
"But why do they have to come here and get an export permit in Harare when we know that almost all the exports of avocados and macadamia are coming from that region.
"So, we are looking at a situation which begs for decentralization, and probably with time if the permits can be accessed on e-platforms the better," said Mr. Marume.
Devolution essentially refers to the cascading of powers and responsibilities to lower levels of governance by a central Government.
Zimbabwe has made a commitment towards the devolution agenda, with Section 301 of the Constitution providing for Inter-governmental Fiscal Transfers from central to provincial and local tiers of Government to support devolution.
Observers contend that decentralization of export permits will help boost the country's horticulture sector, the majority of whose products are typically destined for exports markets, especially the European Union (EU).
Official figures show that Zimbabwe's horticultural exports recorded significant growth last year, with over US$112 million worth of produce exported, up from $50,9 million previously.
The country's horticultural products include flowers, passion fruit, fine beans, peas (mange tout and sugar snap, all berries (blueberries, blackberries, strawberries and raspberries), baby vegetables such as carrots, baby corn, baby marrow, courgettes, chillies namely the birds’ eye, serenade among others, broccoli, citrus, avocado and macadamia nuts.
Mr. Marume was speaking at the launch of the 2020 to 2021 Ease of Doing Business Reforms Programme last week.
He told the meeting that an uneven operating environment was making Zimbabwe's exports uncompetitive, even at regional level.
"From a market survey we did of Botswana in 2017, we found that Zimbabwean products are at least 15 percent more expensive than what you would get from our regional competitors.
"Because of that competitiveness gap, our situation is so sensitive so any extra delay or any extra cost no matter how small you think it is, will probably affect our exports to the point where they are going to be non-existent in the future," said Mr. Marume.

Khartoum — Undersecretary Ministry of Industry and Commerce Abdel Rahman Al Ajab affirmed his ministry's concern on commercial exchange with COMESA.
He pointed out the importance of providing the required facilities for COMESA member states regarding drafting and implementing the program that served the economy, the exchange of commerce and industry at regional and international levels.
In his meeting Sunday at the Ministry Headquarters with COMESA visiting delegation chaired by the Head of Regional Integration Projects Department, Hub Sambiko - AL Ajab explained that the African continent in general and COMESA member states in particular enjoyed abundant human and natural resources.
He said this characteristic facilitated sustainable industrial development.
For her part Sambiko underscored the COMESA concern on Sudan. She pointed out that COMESA gave priority for implementation of its projects and program particularly after the recent positive development in Sudan.
She added that the COMESA came to Sudan in response to direct instructions from COMESA Secretary General in order to resume the implementation of building capacity institutional project in Sudan at a cost of 2.2 million Euro.
Besides she said reviewing and closing the previous project account implemented in Sudan at a cost of 1.2 million Euro. She also said COMESA was at stage of preparing roadmap for offering Support to Sudan in various fields.
As well COMESA Secretary General is expected to visit Sudan in coming two months' time, Sambiko said.

The East African Business Council (EABC) on Tuesday signed a US$ 3.2 million financing agreement with TradeMark East Africa (TMEA) for support in implementing a three-year programme focused on the simplification and harmonization of trade procedures in the region.
The partnership will support EABC's advocacy efforts of improving coordination, reporting and resolution of non- tariff barriers along the corridors; harmonization and adoption of East African standards or sanitary and phytosanitary (SPS) measures; improve adoption and harmonization of Customs and Domestic Tax-related policies and trade facilitation in the region.
"We will coordinate, set the agenda and facilitate evidence-based research on public-private dialogues to reducing barriers to trade in the EAC region," said Peter Mathuki, the EABC Chief Executive Officer.
"We appreciate this partnership with TradeMark East Africa as it will support EABC to evaluate and monitor EAC policies to ensure they work for businesses at ground level and create momentum to accelerate the needed policy reforms for the business and investment climate in the EAC."
As noted, public-private dialogue plays a crucial role in addressing constraints, providing short-term stimulus with long-term impact and contributing to economic growth and poverty reduction.
The project will enhance advocacy and dialogue on transport and logistics, trade facilitation, customs and tax, standards, and NTBs in a bid to increase trade and investments in the region.
The programme also extends beyond the EAC and incorporates the COMESA, COMESA-EAC-SADC Tripartite Free Trade Area (TFTA) and the Africa Continental Free Trade Area (AfCFTA).
"Inadequate trading regimes restrictions on the export of certain commodities, and lack of product diversification and the existence of NTBs continue to hamper intra-regional trade which is still low at 20 per cent compared to other RECs SADC 40 per cent," said Mathuki.
Barriers to trading across borders such as multiple product standard inspections, bureaucratic trade procedures delay business transactions and increase the cost of doing business. The time it takes to export is at an average of 76 hours, which is too high compared to 12.5 hours in OECD High-Income Economies, according to the World Bank Ease of Doing Business report (2018).
According to the report, the EAC is ranked 149 out of 190 in the ease of trading across borders.

Zimbabwe's sugar exports are forecast to increase by 21 percent to 145 000 tonnes in 2019, from 120 000 tonnes last year on the back of increased production and large carryover stocks.
The 2017/18 exports were revised downwards to 120 000 tonnes based on the lower than expected sugar production and updated industry data, according to the Global Information Network Report produced by the United States Foreign Agriculture Service.
The main export destinations for Zimbabwe's sugar are the United States, European Union, Botswana, South Africa and Eastern Africa (Kenya). Zimbabwe exported about 17 443 tonnes of raw sugar to the United States to fulfil the 2017/18 Tariff Rate Quotas (TRQ).
The United States allows duty free access for Zimbabwe sugar under the Tariff Rate Quota (TRQ) programme. The total TRQ and re-allocations offered to Zimbabwe average about 12 000 to 14 000 tonnes annually.
The Southern African country usually fully utilizes its sugar quota as the United States market remains attractive compared to other markets such as the EU.
Zimbabwe exports to the European Union (EU) have significantly decreased since 2017, due to unfavourable prices and low returns when compared to other export markets such as East Africa.
The EU changed its domestic sugar policy in 2017 and removed restrictions for domestic sugar beet production. This change is expected to result in an increase in sugar supply and decreases in sugar prices in the EU.
It is also expected that the change in policy will result in a decrease in EU imports from other countries over time.
On the other hand, sugar imports will decrease by 12 percent to 38 000 tonnes in the 2018/19, from 43 000 in the 2017/18. This is due to the adequate sugar supply in the domestic market, and the only imports will be from South Africa and Swaziland who enjoy duty free access into the Zimbabwe market.
Sugar consumption in Zimbabwe is projected to increase by 5 percent to 345 000 tonnes in 2018/19 due to an increase in production, improved market access in the remote areas of the country and the increased uptake from beverage and food manufacturers.
Sugar cane in Zimbabwe is grown under canal irrigation system in the lowveld area of Triangle and Hippo Valley, in the Chiredzi District, Masvingo Province.
About 80 percent of Zimbabwe's sugar cane crop is produced by two large estates, Triangle Sugar and Hippo Valley. Private farmers, including large scale farmers and the newly resettled farmers, produce an estimated 20 percent of the country's sugar cane.
There are two sugar mills in Zimbabwe, the Hippo Valley Estates Ltd and Triangle Sugar Estates Ltd, with a combined sugar production capacity of about 640 000 tonnes and installed milling capacity of 4,8 million tonnes of sugar cane per annum.

Zimbabwe's cotton output is set to decline by 52 percent this year after a severe drought that was experienced last season, according to Agriculture and Marketing Authority.
Output will be the lowest in two seasons to about 68 000 tones, 142 000 tonnes last year and 74 000 tones in 2017, AMA acting chief executive Ms. Nancy Zitsanza said while giving oral evidence before the Parliamentary Portfolio Committee on Lands, Agriculture, Water, Climate and Rural Resettlement yesterday.
"Production was affected by the drought, which we experienced this past production year," she said.

The drought also affected maize output which dropped by 54 percent to 776 635 tonnes. About 357 000 cotton farmers were registered by six companies that funded production last season. In terms of funding contribution, Cotton, which is administering the Presidential Free Inputs Scheme contributed about 75 percent or $39 million, making it the largest sponsor.
The Government introduced the scheme to save the industry that faced imminent collapse after farmers abandoned cotton production citing poor prices and low levels of funding.
Introduced in 2015, the input scheme has helped production to increase from 28 000 tonnes, the lowest output in nearly two decades to about 142 000 tonnes last season. At peak, Zimbabwe produced 352 000 tonnes of raw cotton in 2012.
Other five players contributed 25 percent of funding, said Ms. Zitsanza. However, she failed to provide proof of inputs procurement the committee had requested.
"You issued the licenses based on what was disbursed . . . but we want to see the proof of procurement," said committee chairman, Cde Justice Mayor Wadyajena, Member of Parliament for Gokwe Nembudziya.
Ms. Zitsanza was latter directed to compile and provide the information to the committee by Wednesday next week.
Speaking before the same committee, Cotton Producers and Marketers' Association chairman Mr. Steward Mubonderi, highlighted some of the challenges affecting the industry. These included the mobile payment system being used to pay the farmers.
He said the punitive rates charged by errant businesses were heavily eroding farmers' earnings. Mr. Mubonderi also appealed that cash be made available to farmers in areas where there is no mobile network.
He also expressed concern over lack of research and development of new seed varieties, arguing this was affecting productivity.
Mr. Mubonderi said the current open pollinated varieties (OPV) were last introduced over a decade ago yet other cotton producing countries have already adopted hybrids varieties with high yields potential. Cottco has since indicated it will, this year, introduce hybrid varieties.
"We need more varieties to suit various regions, rainfall patterns and soils so that production increases," he said.
Further, he suggested that Zimbabwe, should seriously consider producing Genetically Modified Organisms to increase production.
Turning to side marketing, Mr. Mubonderi blamed AMA for lack of proper regulatory controls, warning "this is the (same) cancer" that once killed the industry.
He said there were a lot of loopholes being used by cotton companies to engage in side marketing activities due to lack of proper regulatory enforcement.
On declining production on the back of erratic rains, Mr. Mubonderi said irrigation was the way to go.
Presentations from cotton companies could not be adequately heard after most of them failed to provide documents that the committee had requested. Alliance, Chishawasha and Southern Cotton were asked to submit the documents while Zimbabwe Cotton Consortium was asked to resubmit. China Africa was not represented.
As for Alliance, the committee demanded the chairman of the company attend the next meeting.
"We don't want a one-man show here," Cde Wadyajena told Alliance head of operations Mr. Peter Chapoterera.
"Ask him the date which he is flexible with . . . so that he has no excuse."
Source: The Herald