Investment Forum with MARGARET CHIMANSE
AS PART of the broad mandate of the Zambia Development Agency (ZDA) to increase non-traditional exports, the agency conducts market research in various countries in the region to establish business opportunities and Zambia’s competitive advantage.
Recently, the agency undertook a market research in Mozambique in the province of Tete to explore business opportunities.
The report reveals various business opportunities in various sectors, which the Zambian private sector can explore.
The opportunities exist in processed and refined foods, animal products, engineering and foundry products (steel), primary agriculture (maize seed), and chemical products (fertiliser), among others. According to the report, residents in the province consume a lot of processed and refined foods such as assorted non-alcoholic beverages, Maheu, biscuits, sweets, peanut butter and bread, among others.
The goods are often imported from South Africa, Zimbabwe and Malawi due to the absence of companies in this sector within Tete Province.
Over the last eight years, Tete has experienced an economic boom owing to colossal mining activities within the province which has led to the opening up of international chain stores within the province to service the changing consumption patterns of residents.
Currently, Tete town has three main supermarkets, namely Shoprite, Choppies and VIP supermarket.
The visits to the chain stores revealed that they stock a number of processed and refined foods mainly imported from South Africa.
However, these products are also produced in Zambia and considering that Tete Province is only 274 kilometres away from the Zambian border at Chanida, there is certainly a business opportunity for companies in the processed and refined foods sector to penetrate this market.
Further, despite massive agricultural activity in Tete, one particular sub-sector that is virtually non-existent is animal and poultry farming.
As such, chicken and poultry products such as eggs are sourced from Manica Province or imported from other countries. The chickens in particular are imported from Brazil.
It is worth mentioning that traditionally, Mozambicans in general consume a lot of chicken. Therefore, there is huge demand for this particular product both in Tete and the country at large, which farmers in Zambia can exploit looking at the proximity between the two countries.
Therefore, there is a unique opportunity for companies in the animal and poultry sector to take advantage of the business opportunities in the province.
Zambian chickens, eggs and milk can compete favourably within the province. There is obviously need to work around logistical issues such as transport costs. Despite this, the profit margins are quite high.
In terms of engineering and foundry products, Tete Province has experienced an industrial and economic boom over the last decade arising from the opening up of coal mines in the area.
One particular sector that has benefited from the mining boom in the province is the steel subsector as the coal mining companies procure steel and steel services for their machines. Tete Province currently does not refine iron ore and, as such, most of the steel is imported from Zimbabwe and South Africa.
In addition to the mines, there is also a huge demand for steel products from Mozambique Leaf Tobacco (MLT), based in Tete. The company uses steel products in both production and processing of tobacco.
The researchers indicate that during the visits conducted, both the steel companies and MLT expressed interest in exploring the possibility of importing steel from Zambia. Thus, there is a business opportunity for companies in this sector to explore.
Furthermore, the report indicates that currently there is no company that produces maize seed in the province. As a result provincial agricultural authorities face challenges in distributing inputs to farmers.
As such, Tete sources its maize seed from other provinces which proves troublesome in terms of logistics.
Further, MLT, the country’s sole tobacco processing firm, procures 2,000 tonnes of maize seed annually to distribute to contract farmers as part of the agreement for them to grow tobacco.
The seed is imported mainly from Malawi and Zimbabwe. In fact, the company has previously procured maize seed from Zambia.
Currently, though, MLT does not import maize seed from Zambia due to logistical challenges arising from the absence of backload tracks to Zambia. The company did indicate however that they are willing to engage Zambian companies in this sector to be able to purchase maize seed.
This, coupled with the earlier mentioned challenges pertaining to the production and supply of maize seed within the region, provides a unique opportunity for Zambian companies to explore.
In terms of chemical products, the province of Tete has no company that produces fertiliser. Meanwhile, MLT imports only, on an annual basis, 40,000 tonnes of fertiliser to supply to its 120,000 contract farmers, and this is the highest ranking input in terms of inputs.
This presents another huge opportunity for Zambian companies to explore. There is equally an opportunity for companies in this sector to explore the Mozambican market.
The other business opportunities available revolve around MLT. The company imports plastic tobacco bags and carton boxes for packing of tobacco.
Therefore, companies that manufacture plastics can explore options of supplying these products to MLT, especially that the company is willing to procure the said products from Zambia.
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