ZIMBABWE and South Africa will soon sign a Memorandum of Understanding to strengthen trade and industrial relations, Industry and Commerce Minister Mike Bimha has said. “This framework is expected to further strengthen trade and industrial relations between our two countries. South African business people should take advantage of this framework to explore investment opportunities in Zimbabwe,” Minister Bimha said.
The Industry and Commerce Minister said this while addressing delegates to a Zimbabwe Trade and Investment executive breakfast meeting hosted by The Herald Business in Johannesburg last Friday.
The minister said the governments of Zimbabwe and South Africa were committed to promoting industrial co-operation, hence the initiative to come up with a MoU.
Minister Bimha said SA investments were safe in Zimbabwe, covered by a Bilateral Investment Promotion and Protection Agreement (BIPPA)between the two countries, ratified in 2009.
The efforts to attract investment from South Africa follow a similar initiative in September when Government and the South African Embassy organised a mini-investment conference to look at projects in the infrastructure sector.
“This continuous interaction continues to strengthen our already good trade and economic relations and I applaud this,” Minister Bimha told delegates.
The minister was presenting on “Building Bridges for Trade and Industry Between Zimbabwe and South Africa and Trade Opportunities for the Zimbabwean Diaspora”.
South Africa is Zimbabwe’s biggest trading partner.
“South Africa exported to Zimbabwe goods and services amounting $2,26 billion and imported goods to the tune of $1,58 billion,” Minister Bimha said.
“However, trade is still in favour of South Africa as the business people here are able to export to Zimbabwe cheaper than their counterparts, as they enjoy production volumes and are able to offer very long credit terms of payment,” he said.
The minister said due to structural deformities rocking the economy, local producers were unable to offer similar credit terms or ramp up volumes, but said it was critical that the country closed the trade deficit with its southern neighbour.
Local industry continues to deteriorate, marginally declining to 36 percent this year from 39 percent last year, as firms continued to suffer from the impact of a liquidity crunch.
He said foreign direct investment was critical to resuscitate local industry while the Government was keen on mutual investment partnerships with all investors while affordable lines of credit were needed to retool, recapitalise and for working capital.
The priority sectors for investment in the manufacturing industry and sub-sectors included food, beverages, tobacco, clothing, textiles, leather, fertiliser, chemicals, pharmaceuticals, packaging, metals, electricals and wood, timber and furniture industries.
Minister Bimha said Government had developed the cotton to clothing value chain strategy and that it sought investment in these areas, especially value addition of cotton, raw hides, leather processing and manufacture of leather products.
He said Government encouraged investment in fertiliser production through newer technologies such as coal gasification and coal bed methane and would support such investments through zero tariffs on duties while levying fertiliser imports.
“On pharmaceuticals, there are great investment opportunities in the production of medicinal, veterinary and skin care products. Research and development will also enhance the utilisation of locally available resources,” Minister Bimha told delegates. He said areas mentioned were prioritised under Zim-Asset, but there were more.