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‘Zim vulnerable to external shocks’

ZIMBABWE’S exports are concentrated in a few tariff lines and markets, making them highly vulnerable to external shocks, a report by the Competition and Tariff Commission (CTC) shows. In its latest report, CTC urged Zimbabwe to diversify its products and markets to minimise external shocks.

“Exportation of unprocessed commodities, such as minerals and agricultural produce, is worsening trade balance in Zimbabwe,” the report reads in part.

“There is a need for continued import substitution policies, increasing exports of value-added and manufactured products, SMEs [small-to-medium enterprises] development to explore new markets for Zimbabwe to attain a positive trade balance in Africa, as well as in its regional economic communities.”

The report noted that Zimbabwe has liberalised 84% of its tariff lines in the Southern African Development Community (Sadc), and 100% in the Common Market for Eastern and Southern Africa (Comesa).

“Zimbabwe imports more than it exports to the rest of the world with a trade deficit for the five years under observation, which has slightly declined by 27% comparing 2018 and 2022,” it said.

“Cereal (rice, wheat, maize) imports from the world contributed 4,7% of Zimbabwe’s imports between the 2018 and 2022 period, fertilizers (4,95%), with mineral fuels (petroleum oils and electrical energy) consisting of the largest portion of 22,8%.

“During the same period, commodities, such as tobacco and diamonds, hugely contributed to Zimbabwe’s exports.”

The report said Zimbabwe was importing more than exporting in Comesa. Recently, there has been an increase in imports from Comesa, with the trade deficit reaching over US$604 million in 2022.

Fertilizer, cereals, and cement contributed over 33% of Zimbabwe’s imports from Comesa during the period under review.

Between 2018 and 2022, the report notes that Zimbabwe imported agricultural inputs, largely fertilisers and oilcake, to support crop yields and livestock production given Zimbabwe’s reliance on agriculture.

The country is also importing essential food products, such as cereals (maize), oilseeds and vegetable oils. Other important imports include machinery and cement for construction purposes.

“Zimbabwe has vast tracts of arable land to substitute some of these imports as reliance on some of these essential imported goods impacts the country’s self-sufficiency in crisis

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CTC okays Metro Peech, Heartgroove deal

THE Competition and Tariff Commission (CTC) has approved the acquisition of Metro Peech & Browne Wholesalers by Heartgroove Investments without conditions, indicating that the merged entity will resuscitate a potential competitor in the market.

In November 2023, the commission received notification of the acquisition of the entire shareholding in Metro Peech by Heartgroove.

Heartgroove is a Zimbabwean investment company, fully owned by Sub-Sahara Capital Group (SSCG), which indirectly owns Gain Cash and Carry. Metro Peech is owned by Midosa Investments, Spear Africa Holdings and Andrew Baker.

Heartgroove, through Gain, and Metro Peech are private companies involved in wholesaling and distribution of fast-moving consumer goods (FMCG) in Zimbabwe.

“After analysis, the commission approved the merger without conditions as the merged entity will not harm competition or create a monopoly situation against the public interest,” CTC said in its latest report.

In coming up with this decision, the commission focused on the market for FMCG wholesaling and distribution in Zimbabwe.

Considering that both companies are in the same business, the mergers were identified as a horizontal merger because the parties have a competitor relationship.

Analysis considered market shares, concentration levels and the substantial lessening competition test.

Market shares and concentration levels provide useful first indications of the market structure and of the competitive importance of both the merging parties and their competitors.

Market concentration measures the extent or degree to which a relatively small number of firms account for a relatively large percentage of the market.

Pre-merger, the wholesaling of FMCG market was unconcentrated, implying that the market is less likely to have any serious competition concerns.

It said post-merger; the market remains unconcentrated as there was a small increase in concentration, making it less likely to have serious competition issues.

Metro Peech was put under corporate rescue on August 31, 2023 as it was a financially distressed company unable to service creditors and loan obligations.

The commission established that in 2022, Metro Peach made a US$5,09 million loss and in the six months to June 2023, it lost a further US$2,97 million.

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‘Zim must prioritise industrialisation’

ZIMBABWE needs to give priority to industrialisation and diversifying its productive capacities to mitigate the risk of becoming dependent on imported commodities, a government official has said.

Speaking at the Competition and Tariff Commission annual trade tariff conference in Harare last week, investment promotion and export development deputy-director at the Industry and Commerce ministry Netai Magade said local production was key to economic growth.

Magade said the recent launch of the African Continental Free Trade Area (AfCFTA) presented the most immediate and significant opportunities for expanding the country’s export markets.

“It is crucial for the local industry to position itself to take full advantage of these opportunities here presented such as accessing duty-free exports in a market of about 1,3 billion people,” she said.

“This will not only bring in the much needed foreign currency, but also create employment opportunities for our citizens. To effectively participate in these trading blocs, Zimbabwe must, I repeat, must prioritise industrialisation and the diversification of its production capabilities.

“Without local production, we run the risk of becoming reliant on imported goods, which undermines our economic growth.”

Magade said the Zimbabwe national industrial policy played a vital role in guiding the industrialisation agenda with a focus on value addition and beneficiation.

She said the country had witnessed a 5,5% growth in manufactured export goods, reaching US$404 million in 2022.

These positive developments are encouraging considering the challenges faced by domestic industry, Magade said.

She said trade agreements and industrialisation were closely interconnected.

“Trade agreement open up the market for our domestic industries, leading to increased production, both local and foreign investment and job creation.

“In addition, preferential rates of duty applied under this agreement can make our domestic industry more competitive by importing cheaper inputs, thus boosting productivity.

“Furthermore, the trade agreement attracts foreign direct investment, bringing with them new capital, technology, and skills that support an unpitched industrialisation.”

While participating in trade agreements, Magade said it was 

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Minister talks tough on anti-competitive practices

GOVERNMENT is pushing to finalise legislation that empowers the Competition and Tariffs Commission (CTC) to investigate anti-competitive practices, a Cabinet minister has said.

For years, there has been increasing anti-competitive practices on the market owing to the downturn of the economy resulting in some better capitalised firms having a stranglehold on certain sectors.

Speaking at the 14th anniversary of the World Competition Day commemorations hosted by CTC, Industry and Commerce minister Sithembiso Nyoni said the government wanted to equip the commission.

“Competition cannot thrive without a robust legal framework in place to regulate and monitor market behaviour to ensure compliance,” Nyoni said, in a speech read on her behalf by the ministry’s chief director, Florence Makombe.

“Our government is committed to strengthening the capacity of our competition authority, equipping it with the necessary tools and resources to investigate and prosecute anti-competitive practices effectively.”

She said the ministry was working to finalise the Competition Amendment Bill to equip CTC with the necessary tools and resources to investigate and prosecute anti-competitive practices effectively.

The amendment will help in governing and safeguarding against monopolies, cartels and other forms of anti-competitive behaviour prevailing on the market.

It will also ensure that no single entity has unwarranted control over a particular industry or market segment, thereby preventing the abuse of market power.

“As the minister responsible for Industry and Commerce, it is my duty to ensure a fair and competitive marketplace that benefits both businesses and consumers is created in our country. My ministry is committed to upholding and strengthening competition law to ensure a level playing field for all businesses,” Nyoni added.

She said it would be important to collaborate with other countries to address issues such as price-fixing, abuse of dominance and unfair business practices.

“We will continue to engage with our international counterparts to share best practices and co-ordinate efforts in combating anti-competitive behaviour. Competition law serves as a safeguard against monopolies, cartels and other forms of anti-competitive behaviour,” Nyoni said.

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A. What is Bid Rigging?

Bid rigging (or collusive tendering) occurs when competitors conspire and agree as to who will be the winning bidder. It may take the following forms, amongst others:-

i) Cover/ Complementary/ Courtesy bidding

This is the most frequent way in which bid-rigging is implemented. It occurs when competitors agree on a winner through submitting a bid that is known to be too high to be accepted or one that contains terms that are known to be unacceptable to the purchaser.

ii) Bid Suppression

It involves an agreement among competitors, for one or more of them to refrain from bidding or to withdraw a previously submitted bid so that the designated winner’s bid will be accepted.

iii) Bid Rotation

This entails various ways in which competitors agree to take turns in being the winning bidder.

iv) Market Allocation

This occurs when competitors allocate the market amongst themselves and agree not to submit bids for markets outside their allocations.

B. Prohibition of Bid Rigging

All forms of bid rigging  are prohibited. Section 2 of the Competition Act [Chapter 14:28] (theAct) defines an unfair business practice as a restrictive practice or conduct specified in the First Schedule. In terms of Section 42 of the Act, acts or omissions specified in the First Schedule are unfair business practices for the purposes of the Act. Paragraph 6 (1) of the First Schedule defines bid rigging as follows: –

“Entering into or giving effect to an agreement, arrangement or understanding, whether enforceable or not, with another person whereby—

(a)  any of the parties to the agreement, arrangement or understanding undertake not to submit a bid or tender in response to a call or request for bids or tenders; or

(b)  in response to a call or request for bids or tenders, some or all the parties to the agreement, arrangement or understanding submit bids or tenders that have been arrived at by agreement between themselves.

An exception is where the agreement, arrangement or understanding is between companies which are all part of a group of companies.

C. Anticompetitive Effects of Bid Rigging

When bidders coordinate : –

i) undermines the bidding process and results in rigged prices that are higher

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Captains of industry and commerce eye value-added exports

Story by Wellington Makonese

Ms. C. Mashava (Assistant Director – Tariffs Division)

CAPTAINS of industry and commerce have resolved to expand Zimbabwe’s regional footprint as agreements on relaxation of trade barriers take shape. 

The two-day Annual Trade- Tariff Conference came to an end this Thursday with the private sector highlighting the importance of exploring trading blocs which Zimbabwe is part of.

The resolution comes when the focus is shifting towards reaping trade relaxation gains from the African Continental Free Trade Area (AfCFTA). 

Livestock and Meat Advisory Council executive director, Dr Reneth Mano said, “We are seized with understanding agreements with the EU sector; we have seen that we are ready to exploit opportunities opened in livestock and poultry. We need to reduce transaction costs and improve competitiveness.”

“We are looking to boost intra-Africa trade, we are now expected to increase our market to 1.3 billion and increase the diversity of products that are to be traded without barriers of tariffs,” said Dairy Processors Association of Zimbabwe Secretary General, Mrs Clementine Tendayi Marecha.

The government has reaffirmed its commitment to supporting export-oriented firms.

The Ministry of Industry and Commerce assistant director in the Tariff Division, Ms Cicilia Mashava said, “Harness trade agreements, develop policies that promote exports of value-added products, exporting unprocessed minerals and value-added products hence the need to diversify. We need to tap into the new markets. Produce innovative value-added goods.”

Zimbabwe’s largest export destination is South Africa accounting for 45 percent followed by the United Arab Emirates standing at 28 percent and China at seven percent.


What is Resale Price Maintenance?

Resale price maintenance (RPM) occurs when a supplier enforces a minimum price at which a retailer or distributor must on-sell those goods, thereby preventing the reseller from setting own prices for goods/services. Under RPM arrangements, retailers are not allowed to sell products below the specified minimum price, even if they want to offer discounts or promotions. Most common forms of RPM arrangements are where a supplier i) sets a specific price – a minimum retail price or a minimum margin, at which a product must be resold, and ii)imposes restrictions on how much a reseller can discount the product price.

Prohibition of RPM

Section 2 of the Competition Act [Chapter 14:28] (theAct) defines an unfair business practice as a restrictive practice or conduct specified in the First Schedule. In terms of Section 42, acts or omissions specified in the First Schedule are unfair business practices for purposes of the Act. Paragraph (9) of the First Schedule provides for RPM as an unfair business practice and defines it as specifying the minimum price at which a product must be resold to customers. The practice restricts businesses from competing effectively and is a breach of the Act.

Recommended Resale Price

Suppliers can recommend prices at which resellers may resell products, an arrangement  known as recommended resale price, and which is not RPM as a reseller may resell products at a price they determine themselves. However, if a supplier tries to force a reseller to sell at the recommended resale price, it becomes RPM.

Anticompetitive Effects of RPM

Whilst price ceilings can be a mechanism to protect consumers from exploitation by unscrupulous retailers, the same cannot be said for RPM, given the likely anticompetitive effects arising from such arrangements. Setting of floor prices reduces incentive for innovation and operational efficiency while restricting competition and deteriorating consumer welfare.  The following anti-competitive effects are associated with RPM: –

  • Higher prices for consumers  – by imposing minimum resale prices on products, prices are kept artificially high restricting retailers’ ability to offer discounts or compete on price.
  • Limited consumer choice – when businesses engage in RPM, consumers lose out as they cannot shop around for better value. RPM prevents retailers from engaging in non-price competition such as customer service, product quality and product selection. This reduces consumer choice and results in a less competitive marketplace.
  • Creation of barriers to entry for new players – when manufacturers/suppliers enforce minimum resale prices, it is difficult for new entrants to compete on price to gain market share.
  • Limited access to goods and services – if retailers cannot set their own prices or engage in price competition, they may choose not to stock certain products or serve certain markets where profitability is uncertain (e.g., remote areas). This results in limited access to goods and services for consumers in these areas.
  • Formation and maintenance of cartels – RPM can be used to fix prices at all stages of distribution and facilitates cartels. Retailers can conspire to set retail prices at monopoly levels and, because it is the manufacturer who appears to be setting retail prices, collusion diverts attention from the collective price setting by the retailers.

Criminal Liability for Engaging in RPM

The Act provides for criminal liability of any person who engages in RPM. In terms of Section 42 (3) of the Act: –

“Any person who enters into or engages in or otherwise gives effect to an unfair business practice shall be guilty of an offence and liable – a) in the case of an individual  to a fine  not exceeding level twelve or to imprisonment for a period not exceeding two years or to both such fine and imprisonment; and b) in any other case to a fine not exceeding level fourteen.

The Commission, after establishing a case of RPM, refers the matter for prosecution and the appropriate level of fine is determined by the presiding officer.

Zim’s citrus exports seen soaring this year

ZIMBABWEAN citrus exports to China are expected to be surpassed this year after the total external trade of the fruit variety reached a value of US$33,78 million last year, up from just over US$10 million in 2021.

The prediction is based on the General Administration of Customs of China (GACC), in June, allowing 11 local citrus orchards and six citrus pack houses to export the fruit variety into China.

Fresh citrus produce to be exported includes sweet orange (citrus sinensis), mandarin orange  (citrus reticulata), grapefruit (citrus paradisi), lemon (citrus limon and  citrus aurantifolia) and sour orange (citrus aurantium).

In its second quarter newsletter, the Competition Tariff Commission (CTC) said with stability coming into play post-pandemic and sudden growth in demand, this created growth opportunities for Zimbabwean agricultural citrus farmers.

“Zimbabwean citrus exports have been increasing over the past eight years with the highest export value recorded in 2022 of US$33,781 million. Fresh or dried oranges are the main exports,” the CTC said.

“China’s import of Zimbabwean citrus produce will increase citrus exports compared to 2022. 

“The CEA facilitates citrus exporters’ access to a bigger market and market diversification opportunity reducing dependence on local markets. 

“Given that farmers are complying with GACC standards, this means investment into machinery and processes to ensure that products meet standards.”

The CTC said that improvement in local farms and orchards transforms the farming industry through innovations and adoption of new technologies.

The commission based its findings off the recorded trade figures listed on international trade tracking website, the Trade Map.

“According to Trade Map, China imported citrus fruits worth US$594 million in 2019 alone,” the CTC said. 

“China’s orange production has slightly increased over the past 3 years from 2018/19 to 2020/21, from 7 200 000 MT (metric tonnes) to 7 500 000 MT, while consumption increased from 6 989 000 MT to 7 335 000 MT.

“In the same period, there has been a drastic reduction in imports from 4 340 000 MT to 2 900 000 MT and stagnant exports of 55 000 MT. 

“Before the pandemic, China’s orange imports witnessed seven consecutive

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Citrus exports rakes in US$33,8 million

Sikhulekelani Moyo,

Zimbabwe’s citrus exports raked in US$33,8 million in 2022 with fresh or dried oranges singled out as the main contributors to exports receipts, the Competition Tariff s Commission (CTC) has said.

In its latest newsletter, CTC said the country’s citrus exports have been increasing over the past eight years with the highest export value of US$33, 781 million recorded last year.

“In 2021, citrus fruit production in Zimbabwe was 138,264 metric tons (MT) and has been growing at an average annual rate of 2,89 percent, according to the World Bank. It exported 57,283 MT of citrus produce to the UK, Singapore, UAE, Malaysia, Hong Kong, Netherlands, and Zambia,” said CTC.

Zimbabwe and China entered into a Citrus Export Agreement (CEA) , a development that CTC said will open new opportunities  to boost  agricultural trade.

Eleven citrus orchards and six citrus pack houses from Zimbabwe were selected to be part of the citrus exporters to China.

Fresh citrus products to be exported include sweet orange (citrus sinensis), mandarin orange (citrus reticulata ), grapefruit (citrus paradisi), lemon (citrus limon and citrus aurantifolia), and sour orange (citrus aurantium).

The commission said the agreement will bring increased demand for agricultu ral produce and improvement in the balance of trade as well as the transf ormation of the farming industry and gaining new markets.

China ‘s import of Zimbabwean citrus produce will increase citrus exports compared to 2022. The CEA facilitates citrus exporters’ access to a bigger market and market diversification opportunity reducing dependence on local markets,” they said.

Given that farmers are complying with General Administration of Customs of China (GACC) standards, this means investment into machinery and processes to ensure that products meet standards. Improvements in local farms and orchards transform the farming industry through innovations and adoption of new technologies.”

According to Trade Map, China imported citrus fruits worth US$594 million in 2019 alone.

China’s orange production has slightly increased over the past three years from 2018/19 to 2020/21, from 7 200 000 MT to 7 500 000 MT, while consumption increased from

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Zim in line to reap big from China citrus market

ZIMBABWE’S citrus producers stand to benefit from the massive Chinese market following the conclusion of the Citrus Export Agreement (CEA) with Asia’s largest economy, says the Competition and Tariff Commission (CTC).

Signed in 2015, the agreement was largely designed to secure a ready export market for citrus produce for smallholder growers under the Shashi Irrigation Scheme in Bindura.

The agreement smoothens the movement of first-order shipments from registered companies that have met stipulated compliance requirements.

Zimbabwe’s fresh and dried citrus exports reached an eight-year high of US$33,8 million in 2022, from less than US$5 million in 2015, and tapping into the Chinese market provides an excellent opportunity to further stimulate the shipments.

In 2021,citrus fruit production in Zimbabwe was 138 264 tonnes.

Of that output, Zimbabwe exported 57 283 tonnes to the United Kingdom (UK), Netherlands, Singapore, Malaysia, Hong Kong in Asia, United Arab Emirates (UAE), and Zambia.

Apart from their health benefits to human consumption, citrus products have another essential utility given their medicinal values such as in the production of insecticides, cosmetic and soap industries.

According to the World Bank, Zimbabwe’s citrus exports have been growing at an annual rate of 2,89 percent since 2015, with the highest export value recorded in 2022.

South Africa, Egypt, Australia, the United States of America (USA), and Spain with regard to the Chinese citrus market.

In 2022, South Africa topped the fresh and dried oranges suppliers list to the Chinese market deliveri ng products worth US$117,499 followed by Egypt at US$36,181, Australia (US$35,564), USA (US$30,137) while Spain supplied US$7,942.

Zimbabwe is primed to benefit immensely from the Chinese citrus fruit market if the opportunity is taken up seriously,particularly after a dip in China’s citrus imports given the unprecedented rise in freight and labor costs attributable to Covid-19 pandemic.

Although the Chinese market presents a huge opportunity for Zimbabwe’s citrus exports, the country faces stiff competition from other African markets, hence the need to invest more in enhancing quality and competitiveness of products to meet international standards.

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