Cross-border trading presents significant opportunities for the Zimbabwean economy, offering a range of benefits that can drive economic growth, foster regional integration, and create employment opportunities for young people and women.
By engaging in trade with neighbouring countries and international markets, Zimbabwe can unlock new avenues for economic development and enhance its competitiveness on the global stage.
According to the United Nations’ International Organisation for Migration (IOM), informal cross-border trade accounts for up to 40% of southern Africa’s intra-trade estimated USD$17 billion annually.
Women make up approximately 70% of informal traders in the Sadc region, according to the (International Organisation for Migration) and have fewer opportunities in the formal employment sector (compared to men) as a result of several other factors including lack of access to education for women and girls.
This opinion contribution is going to take a deep dive into the opportunities that cross-border trading presents for the Zimbabwean economy.
- Market access and expansion:
One of the primary benefits of cross-border trading is increased market access.
By tapping into markets beyond Zimbabwe's borders, local businesses can reach a larger customer base, explore new demand for their products and services, and diversify their revenue streams.
Access to larger markets can also help Zimbabwean businesses scale up their operations, improve efficiency, and achieve economies of scale, ultimately driving business growth and profitability.
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- Diversification of products and markets
Engaging in cross-border trade allows Zimbabwean businesses to diversify their products and markets, reducing dependency on a single market or product.
Diversification can help mitigate risks associated with market fluctuations, changes in consumer preferences, and economic downturns.
By expanding into new markets and offering a variety of products and services, businesses can enhance their resilience and adaptability to changing market conditions.
- Foreign exchange earnings and reserves:
Cross-border trade is an important source of foreign exchange earnings for Zimbabwe, which is crucial for stabilizing the economy, which has been under the weather for a long time now, through supporting imports of essential goods, and servicing external debt.
Exporting goods and services to international markets can help boost foreign currency reserves, strengthen the local currency, and reduce pressure on the balance of payments.
A healthy reserve of foreign exchange reserves also improves Zimbabwe's ability to handle external shocks and financial crises.
- Regional integration and collaboration:
By participating in cross-border trade, Zimbabwe can strengthen its ties with neighbouring countries and promote regional integration.
Enhanced regional cooperation can lead to the development of shared infrastructure, harmonised trade policies, and streamlined customs procedures, creating a more conducive environment for cross-border trade.
Regional integration can also foster mutual economic growth, promote cross-border investments, and facilitate the movement of goods and services across borders.
- Job creation and economic development:
Increased cross-border trade can stimulate economic activity and create employment opportunities in Zimbabwe.
As businesses expand their reach to international markets, they may need to hire additional workers, invest in skills development, and upgrade their infrastructure and technology.
Job creation in sectors such as manufacturing, agriculture, logistics, and services can help reduce unemployment, alleviate poverty, and improve living standards for the Zimbabwean population.
- Policy reforms and infrastructure development:
To fully leverage the opportunities presented by cross-border trading, Zimbabwe needs to address key challenges such as trade barriers, regulatory hurdles, inadequate infrastructure, and currency fluctuations.
Implementing policy reforms to streamline trade processes, reduce trade costs, and enhance market access is essential.
Investing in infrastructure development, including transportation networks, border facilities, and digital connectivity, can also improve the efficiency and competitiveness of cross-border trade.
Challenges in cross border trading
Cross border trading has its fair share of challenges a result of different reasons.
A research that was conducted by Amnesty International and published in March 2024, discovered that women engaged in cross-border trade habitually encounter considerable economic exploitation, which adversely affects their aptitude to earn a living and undermines their financial constancy.
This exploitation, according to the research, takes various forms, including bribery, theft, and arbitrary confiscation of goods.
The susceptibility of women informal cross-border traders to economic exploitation is heightened by gender-based discrimination at borders and a perceived lack of legal protections.
The report highlights systemic state failures in upholding the right to social security, with notable deficits in addressing the substantial care responsibilities borne by women engaged in cross-border trade.
In the absence of social protection coverage, many of the women reported inability to exercise their right to an adequate standard of living.
They also faced challenges such as being unable to take time off when sick and having little support in terms of childcare.
Another study that was conducted by the Vendors Initiative for Social and Economic Transformation (Viset) in collaboration with Oxfam in 2022 revealed shocking levels of xenophobia and gender based violence in cross border trading.
The report said that 60% of the interviewed women cross borders said that they have personally experienced xenophobia. In one of the focus groups discussions conducted during this study, women cross border traders said that they are often referred to as “makwerekwere” by immigration and border security officers.
“Makwerekwere” is a derogatory term that is used to refer to Zimbabwean illegal foreign nationals in South Africa.
Bureaucratic and administrative hurdles: Complex procedures and paperwork can delay trade. Most ports of entry have a huge challenge of congestion.
Congestion is a result of large volumes of travellers, complicated border and customs clearance procedures and inefficient service delivery by the border authorities. Sadc governments especially ministries of Home Affairs, Trade and Finance must also be engaged with proposals on how cross border travel and customs procedures can be streamlined to ensure efficiency and avoid congestion as well as delays at the border-which seems to breed corruption, gender-based violence and other challenges faced by women informal cross border traders
Uncertainties regarding Zimbabwe’s policies and regulations governing the exportation and importation of goods was also cited as one of the challenges affecting women informal cross border traders.
For example, in 2016 and without any prior notice the government introduced Statutory Instrument 64 of 2016through which it banned the importation of certain goods.
Some of the major challenges at a glance are as follows:
- Corruption and extortion: Corruption at border posts and from officials can increase costs and discourage trade.
- Infrastructure constraints: Poor road conditions, inadequate storage facilities, and inefficient border posts hinder trade.
- Limited access to finance: Traders face difficulties accessing affordable finance and insurance.
- Currency fluctuations: Volatile exchange rates increase risks and uncertainty.
- Security concerns: Theft, robbery, and smuggling threaten traders' safety and goods.
- Standardisation and certification: Compliance with varying standards and certification requirements can be challenging.
- Limited market information: Traders lack access to reliable market information, hindering informed decision-making.
In conclusion, cross-border trading offers momentous opportunities for the Zimbabwean economy to expand its market reach, diversify its products and markets, generate foreign exchange earnings, promote regional integration, create jobs, and drive economic growth.
By harnessing these opportunities, addressing challenges, and implementing supportive policies, Zimbabwe can position itself as a competitive player in the global marketplace and pave the way for sustainable development and prosperity.
*Wadzai is the executive director of the Vendors Initiative for Social and Economic Transformation (Viset)
These weekly articles are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Private) Limited, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe. Email – kadenge.zes@gmail.com or Mobile No. +263 772 382 852
