SOUTH AFRICA has increased market share of manufactured goods that it is importing from Zimbabwe despite the continuous decline in capacity utilisation in local firms.
According to the latest survey by the Confederation of Zimbabwe Industries, South Africa increased its import market share by 6 percent to 18 percent this year from 12 percent last year.
Zambia, which maintained its position as the top destination for Zimbabwean exports, gained one percentage point to 31 percent.
Second-placed Malawi also increased its market share of imports from 17 percent to 19 percent in 2013 while Mozambique remained static at 13 percent.
Botswana’s share of Zimbabwean products dropped from 11 percent last year to 4 percent and the export market share for the rest of Africa went down from 9 percent to 7 percent.
Other countries, consisting of a diverse grouping of countries across the world where Zimbabwe did not export before, gained a 3 percent market share and Europe retained its 5 percent share.
While most players in the manufacturing sector face competition from many countries, South Africa has remained the largest competitor to Zimbabwean industry.
The survey showed that 85 percent of the respondents said SA was the biggest competitor of Zimbabwean products while 67 percent pointed to China as the biggest competitor.
The manufacturing sector has been facing a plethora of challenges over the years resulting in only a few companies managing to produce for foreign markets as costs of production and working capital constraints increased.
The result was an influx of imported goods which saw the sector deteriorating further as there was need to bring in raw materials and other processed products due to shortages in the local market.
Manufacturing’s contribution to the Gross Domestic Product has also declined as a result, from 14,4 percent in 2011 to an estimated 2,3 percent last year.
This year, it has been projected to decline to 1,5 percent. According to the survey, companies that had not exported in the past two years said their products could not compete on the international market especially when they were juxtaposed with products coming from South Africa and China.
They also cited the shortage of working capital which resulted in most firms focusing on meeting local demand while the high cost of production rendered the products expensive.
Manufacturers also said they were faced with challenges when they wanted to export which included access to trade finance, access to imported inputs at competitive prices as well as identifying potential markets and buyers.
Companies have also said they experience challenges in dealing with the bureaucracy at foreign borders and the technical requirements and standards abroad.
Local manufacturing companies are producing largely for the domestic market with only 20 percent of local goods finding their way to foreign markets.