Archives March 2024

‘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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