Market News

Listening to Lusaka Avocado Multi-Purpose Cooperative Society (LAMCS) board chairperson Bernard Chiwala discuss the potential of Zambia agriculture sector and the ready market last Sunday, underscored the long-held thought.

The thought is that Zambia has not fully capitalized two important markets, the Democratic Republic of Congo (DRC) and China.

"Congo is a yawning market: they pay in (United States) dollars. It is an urgent matter because if we continue at this pace, there are other people who will go into the market," Mr Chiwala said during a ZNBC Sunday Interview programme.

Picking it up from there, Zambia stands to benefit by exploiting the Congo market to the fullest, given various factors in that country.

Similarly, countries like Zambia stand to greatly benefit from capitalizing on huge markets like China's for various goods and services and one day this column will demonstrate that but today the focus is on DRC.

In 2019, this forum pieced together a two-article series on that.

That was after the DRC went to the poll on December 30,2018 to elect the successor to Joseph Kabila who was constitutionally-barred from re- contesting the presidency after his 18-year rule.

The series focused on what a DRC's neighbour, like Zambia, can benefit from this vast country by looking at some elements of its economy.

As pointed out then, DRC is a giant mining country which has been Africa's leading copper producers for nearly a decade now.

According to Mining for Zambia, in 2013, for the first time, the DRC surpassed Zambia's copper production level to become Africa's leading copper producer.

It then posted an output of 925 000 tonnes per year.

This could be said to have been a surprising accomplishment, given that barely 10 years earlier, the country was producing copper of as low as 70, 000 tonnes annually.

DRC came off a low base and rapidly increased its copper production.

After catching up with Zambia's production figures in 2013, the francophone neighbour outdid Zambia and a few years later hit the record one million tonnes, which feat has, for about 20 decades, been elusive to Zambia.

According to the World Bank, the largest Francophone country in Africa has more than 1,100 minerals and precious stones.

According to Mining.com, an online resource on mining issues, with the likes of Glencore, Randgold, Zijin, China Moly and Ivanhoe heavily investing in it, DRC has become a force to reckon with as a copper producer.

According to Focus Economics the economy has gained pace on continued strong activity characterized by sharp rise in the overseas sales of copper and cobalt--two of the country's key export commodities.

In terms of economic fundamentals, the DRC Gross Domestic Product (GDP) averaged $12.08 billion from 1960 until 2017, reaching an all-time high of $37.92 billion in 2015 and a record-low of $2.88 billion in 1964.

In fact, DRC, which has a long history of poor economic performance, has recovered and managed to avoid a recession in 2020, unlike most of its neighbours including Zambia.

The International Monetary Fund had predicted comfortable growth that has even been revised upwards, to 5.4 per cent instead of 4.9 per cent for 2021, and 6.2 per cent instead of 5.6 per cent for 2022.

Estimated at 93,957,168 as of Monday, based on Worldometer elaboration of the latest United Nations data, the DRC population is a strong factor when it comes to providing the market.

DRC, the fourth most populous country in Africa with a small but growing middle class, is an enormous market which can greatly benefit Zambia.

Generally, and for historical reasons, Congolese hold a high opinion of Zambian products and services, particularly in terms of the quality-to-price ratio.

The DRC is undertaking various programmes to rehabilitate various sectors including agriculture, energy, construction, basic infrastructure, and transportation.

In the interim, the DRC turns to its good neighbour, Zambia, for various products like maize, including on government-to-government arrangement.

The DRC Government has created a working group to improve the business climate and is actively seeking to increase foreign trade and investment.

Generally, exporting to the DRC can offer high profit margins as the market is not yet saturated with competition, as Mr Chiwala notes.

That is buoyed by a feeble manufacturing sector, porous borders, the weak capital's links with surrounding citizens and between the regions which renders the DRC an import-based economy.

This is according to the United States (US) International Trade Administration DRC Commerce Guide.

Low-cost consumer goods and foodstuffs smuggled into DRC from Angola and Zambia have undercut local production and resulted in large-scale capital flight which could be formalize by a form trade.

Zambia has, however, not performed well in this area and for instance it imported more than it exported, in value terms.

Zambia exported $326 million worth of goods and services to Congo while that country exported goods and services valued at $1.24 billion according to the US Commerce Department.

Source: The Times of Zambia

LOCAL horticultural firms are set to have wider access to export markets after Del Monte Produce, one of the world's leading vertically integrated producers, marketers and distributors of horticultural products expressed interest in the local fresh produce.
Del Monte Produce, a US agribusiness firm based in California with branches in Dubai, the UAE, is one of the companies visited by a Zimbabwean delegation at the Dubai Expo in October last year.
Following the visit, Del Monte is now engaging local companies for the export of oranges, blueberries and other products, with high hopes that the country could benefit from better prices for its produce.
Industry and Commerce Minister Dr Sekai Nzenza told The Herald Finance and Business this week Del Monte Produce was also working with ZimTrade to subcontract local companies through providing appropriate seed for guaranteed product quality.
"In order to help in the actualization of value chain development in the country, the Ministry of Industry took advantage of the global forum to sell the Zimbabwean brand," said Dr Nzenza.
"One such visit was to the United Arab Emirates, where we took advantage of the visit to engage with companies who are doing business with the country and those not yet doing so through various interventions."
Del Monte is also the leading producer and distributor of prepared food across the globe.
During the third quarter to October 2021, Del Montes' net sales increased to US$1 billion compared with US$989,7 million in the prior-year period. Net sales for the first nine months of 2021 were almost flat at US$3,2 billion compared with the same period in 2020.
The firm's gross profit for the third quarter decreased to about US$48,9 million compared with US$67,3 million in the prior-year period while gross profit for the first nine months of 2021 increased to US$264 million compared with US$214,5 million in the same prior-year period
Dr Nzenza said the Government had also engaged Ali Gholami, one of the leading companies in fresh fruits and vegetables in the UAE. The firm specializes in the procurement and supply of a wide variety of fresh products into the Gulf region.
Following the visit, ZimTrade is also facilitating the export of fruits such as banana, strawberries, blueberries, watermelons, pears, avocados, mangoes, grapes, pineapples vegetables such as broccoli, cabbage, tomatoes, green peas, green beans, onions okra and mushroom to the UAE.
The five-year contract signed between Ali Gholami and a local company, Eden Chase Zimbabwe for the supply of various products such as lettuce, strawberries, blueberries and peas is also being revived.
"Under the value chains development framework as contained in the National Development Strategy 1, agro-processing companies in the country can take advantage of good climate conditions in the country, to increase horticultural products production, and thereby increasing the market share with the continent under the Africa Continental Free Trade Area framework," said Dr Nzenza.
Source: The Herald

Africa's medicinal cannabis market will be worth $7.1 billion by 2023.
Morocco legalized the product last year with the "illegal" cannabis industry exporting US$13 billion worth of pot to Europe annually.
Discussions about cannabis as a cure of the Coronavirus, though not backed by any science, have gained foot, with some promoting the plant to combat some effects of the virus.
Intadose Pharma, a Canadian-based corporation, completed a record Shipment of medicinal cannabis weighing 2.125 tonnes from South Africa to North Macedonia on December 25, 2021.
According to Phobition Partners, a research and consultation firm that deals in the legal cannabis industry, Africa's medicinal cannabis market will be worth US$7.1 billion by 2023. Cannabis is the world's most cultivated drug.
Africa's hunger to exploit the cannabis market is accelerating because of the much-needed revenue and the effects of the COVID-19 pandemic. Discussions about cannabis as a cure of the Corona Virus, though not backed up by any science, have gained foot, with some promoting the plant to combat some effects of the virus.
In June 2020, South Africa got the trial of marijuana off the ground as part of the six herbs that could effectively fight the COVID-19 pandemic.
A 2020 report by the research firm estimates that the marijuana market will be based majorly in the following five countries. Market size would generate as follows if the required legislations take effect: Nigeria (US$3.7 billion), South Africa (US$1.7 billion), Morocco (US$900 million), Lesotho (US$90 million), and Zimbabwe (US$80 million).
The co-founder and CEO of the Africa Cannabis Advisory Group, Sibusiso Xaba, said that he had experienced the most significant recent developments in South Africa, projecting that the market in the country will be the largest by revenue.
Xaba reported that Africa exported over 15 tonnes of legal cannabis to the rest of the world in 2021, a tenfold increase from 2020.
Challenges facing legal cannabis farming in Africa
Morality laws. Governments arrest many plant farmers who cultivate, sell, and consume cannabis in most African countries.
In most African countries, the consumption of marijuana goes against religion. In a country estimated to have 2.6 million users of cannabis, the first lady of Uganda, Jane Museveni, and a section of cabinet secretaries have opposed legalizing the product terming it as "satanic" and ruinous to the future of the youth in Africa.
There has been stigmatization and a negative public perception of marijuana. Most people believe that Marijuana consumption slows down the brain's thinking capacity, which demotivates farming of the product.
There is insufficient knowledge about the industry by most governments in Africa.
Investors to support cannabis farming are scarce. Most investors have been discouraged by the legal restrictions placed by most African countries barring the cultivation and selling of the product.
Despite the regulations and legal concerns in the country, the progress in South Africa is gathering the hype. The government has allowed commercially restricted hemp farming, a botanical class of cannabis that contains less THC (the psychoactive compound that causes the "high" effect).
As governments across Africa change their approach to embracing the product's farming, they are making multi-million-dollar investments in the sector.
On June 3, 2020, Goodleaf, one of South Africa's pioneer brands of commercial cannabis, merged with Highlands investments from Lesotho, the first country to legalize marijuana in Africa, in a deal valued at about US$45.2 million.
Morocco legalized the product last year. Reports show that the "illegal" cannabis industry exported 13 billion worth of pot to Europe annually and employed over 1 million people despite the plant being illegal.
By improving regulations and legal frameworks, countries located along the equator have an immense potential to contribute to Cannabis innovations for the production of medicine, paper, eco-bricks, and plastics.
Nqobile Bundwini, a lecturer at the University of Cape Town, says that cannabis can revive South Africa's ailing economy.
"South Africa tends to lag behind and not use its rich resources optimally. And if we don't, we will get left behind in a situation where we should be the pioneers and leading from the front," Nqobile said.
Source: The Exchange