Ways of improving Zimbabwe’s export potential
- One way of improving foreign trade was to introduce the Zimbabwe International Trade Fair (ZITF).
- This is held annually in Bulawayo as a showcase for Zimbabwe’s products.
- Zimbabwean companies also participate in trade fairs organized by other countries for example Zambia, Tanzania and Libya.
- Another strategy which was adopted in 1994 to boost Zimbabwe’s export potential was the establishment of Export Processing Zones (EPZs).
- EPZs are small favourable investment and trade conditions that are created in-order to attract export oriented industries.
- The main characteristics of an EPZ are:
- Geographical separation (area is usually fenced off)
- Export oriented products.
- Focus on manufacturing activity.
- High participation by Translational companies (TNCs).
Incentives offered to attract investments at potential EPZs
- Repatriation of profits by foreign firms.
- Tariffs are waivered in importation of machinery used for the manufacture of goods for exports.
- Limited foreign exchange controls.
- Provision of infrastructure such as transport, water and power supply.
- Cheap land.
- Industrialists are allowed to operate from temporary structures while they are constructing permanent ones.
- Tax reductions are given on money spent on training of manpower and provision of social services.
- Firms are allowed tax holidays.
- Regulations relating to minimum wages are often suspended.
Advantages of EPZs
- Empowered creation as industries are generally labour intensive.
- Diversification of the economy through industrialization and increased investment.
- Industrial growth occurs in the absence of a large local market.
- Transfer of technology.
- Development of human resources through on the job skills training.
- Increased goods for the local market.
- Expansion of international economic linkages.
- Government revenue through company taxation.
- Stimulation of the growth of local industries which do sub-contract work for foreign owned firms.
- Increased market potential of the area and growth of service industries.
Disadvantages of EPZs
- TNCs import highly skilled manpower.
- Low firm loyalty. Firm can disinvest if market condition change or they are changes in government policies.
- Exportation of profits limits the firms’ contribution to the economy of the country.
- Exploitation of labour through underemployment and low wages.
- Foreign labour practices are introduced.
- High labour turn out due to low wages.
- There is limited transfer of technology as foreign workers often return to their countries of origin.
- High cost of imported materials restricts the sale of surplus goods on the local market. Therefore goods are too expensive for the locals.
- High cost of provision of infrastructure.
- Heavy reliance on foreign markets where competition from other producers is high and there is tendency to over supply the market.
- Firms often have weak linkages with local firms.
- Underpricing of goods being exported.
Reasons for the slow establishment and expansion of EPZs in Zimbabwe include:
- Outdated machinery.
- Competition from South Africa which has a larger industrial base.
- Since the abolishment of the policy of separate development (apartheid) in 1994, the number of foreign investors in South Africa has increased significantly.
- Negative international publicity related to land redistribution has resulted in a significant decrease in foreign investment in Zimbabwe.
- Sites such as Mutare, Beitbridge and Norton have limited infrastructure and a small industrial base.
- Political control or influence over choice of sites for EPZs has resulted in the selection of sites with limited potential for industrial growth.
- Zimbabwe’s land locked position has inherent problems, for example, high costs of transport to ports of exports, high handling costs at ports and negative impact of internal security problems in neighbouring countries.
- High tariffs also have a tendency of reducing exports.
- Resources exploitation is not easy and there are many difficulties that are faced which can be grouped into physical factors and human factors.
- The following are physical and human factors that may cause problems of resources exploitation.
To access more topics go to the O Level Geography Notes page