MINING and industrial equipment manufacturing concern, Shepco Group, plans to invest about US$2 million in its operations this year as it gets ready to actively participate in the African Continental Free Trade Area (AfCFTA) through exports.
AfCFTA — the world’s largest free-trade area — came into being on January 1, 2021, creating a market of 1,2 billion people and the eighth economic bloc in the world with a US$3 trillion combined gross domestic product, which is expected to more than double by 2050.
So far, the agreement has been signed by 54 of the 55 African Union member states, while 44 have deposited their instruments of ratification, but only four have ratified the protocol on the movement of people.
Zimbabwe is one of the African countries, which have taken advantage of the trade bloc.
The engineering firm operates two divisions — Shepco Industrial Supplies and Shepco BMA Fasteners, a bolt manufacturing section that was bought on liquidation in December 2015 from Steelnet.
Shepco Industrial Supplies manufactures mining equipment such as locomotives and underground loaders, among others.
“This year, we are looking at about US$2 million in terms of investment and we have started ordering the equipment and we should be starting to receive perhaps, the first batch of machinery that we've ordered in April.
“We are still on that drive, but it has slowed down a bit,” Shepco Group chief executive officer, Shepherd Chawira told Standardbusiness in an exclusive interview.
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In terms of exports, the Shepco chief said they were targeting countries in the Southern African Development Community region, mainly Zambia, Malawi, Mozambique, Democratic Republic of Congo and going up north.
Rwanda is also under their radar.
“There are quite some opportunities especially with the coming in of the African Continental Free Trade Area,” Chawira said.
“We are really hoping that opportunities have been created and we're gearing ourselves for export.”
He, however, bemoaned the high cost of doing business in the country, saying it made exports uncompetitive.
“We really want to implore our authorities to relook at the business environment as well as charges that are being charged by the regulatory bodies and try and regularise that environment so that the cost to business can come down for us to be competitive on our exports,” the CEO said.
Another big challenge affecting the economy, according to Chawira, was lack of adequate electricity.
He said electricity was also expensive as the Zimbabwe Electricity Supply Authority had been increasing tariffs regularly.
“The availability of power has also been a challenge, forcing us to use generators which are high cost and that have kept our costs very high.”
According to Chawira, Sherpco was scheduled to begin exporting their goods by the end of last year, but they have not because of a power crisis and other difficulties.
“Generally as an economy, we are a high cost economy,” he added.
“The interest rates are high and there are too many regulatory bodies, charging all the various fees and the cost of doing business is not easy for local companies.
“Therefore, we are not competitive in terms of exports as a country because of our business environment.
“So, we haven't started exporting but we look forward to when the business environment improves, we really look forward to exporting.
“We want to try again this year. We are really doing our best to try and start the export business.
“The more positive thing is our projects on roller manufacturing took off very well and we believe we have really achieved a lot of import substitution in terms of that aspect.
“We added to the few players, which were in the economy that are into manufacturing.
“And I think that is going to reduce imports on that product line.”
The company invested about US$2,35 million into the plant for making roller equipment.
In terms of capacity utilisation for all companies, Chawira said Shepco BMA was very low, sitting at about 20% while Shepco Industrial Supplies was operating at about 70%.
