Zimbabwe is by far a minor player in global trade and economics. Our performance in the global village mirrors how Africa is struggling to make any economic impact despite being endowed with vast natural resources. Africa contributed a declining figure of $327 billion (2 percent) to global exports in 2016 due to depressed commodity prices.
Zimbabwe only accounts for 0,9 percent of that small figure on the continent at $2,8 billion in exports value. The biggest players in Africa being South Africa, Nigeria, Morocco and Angola. The top 10 African exporters contributed nearly 80 percent of trade to the global village from the region, showing the wide gap between the advancing economies and the rest of Africa.
The growth of China and India, coupled with the planned exit of Britain from the EU presents sustainable export opportunities for Zimbabwe and Sub Saharan Africa (SSA) to those three markets.
These opportunities can trickle to our economy since Chrome, Platinum, Iron and Steel are critical in infrastructure projects underway in Asian markets. Other commodities that can uplift our economy include tobacco and horticulture produce which are very attractive to Britain, The EU and Asian markets.
Zimbabwe’s economy is mainly anchored on mineral exports and agriculture. Agriculture is pivotal in the local economy as it provides 70 percent of industrial raw materials locally, 39 percent of export earnings and 13 percent to Zimbabwe’s GDP which totalled $14,3 billion in 2016.
Mining on the other hand has potential to make the country a colossal hub in global trade and contribute more than the $1,9 billion export value recorded from January to November 2017. South Africa, Zambia and Botswana have managed to achieve this feet with their mineral based economies.
Zimbabwe boasts of the world largest deposits of Chrome, second largest deposits of Platinum and huge deposits of other high fetching minerals such as gold, copper and nickel. The revival of key economic sectors locally such as manufacturing, transport and banking is therefore fixed to the resurgence of agriculture and mining industries.
To be a potent player in the global village, Zimbabwe has to cement its position on areas where it has competitive advantage such as agriculture and valuable minerals. Several policies are available to achieve the above objectives. Some of the policies have been tabled in the past with no meaningful action on the ground.
Value addition and beneficiation
Value addition and beneficiation contributions cannot be overemphasised as the value of our exports triples once minerals are processed locally. Processing plants should be made mandatory for all new Greenfield Investments in mining.
The government and relevant bodies such as Zimbabwe National Chamber of Mines and Minerals Marketing Corporation of Zimbabwe (MMCZ) can come up with beneficiation incentives for all mining companies to process their produce locally. This can be done as a phased approach with national project status recognition from the government as was the case with Bindura Nickel Mine expansion in 2015.
Effective land use for strategic crops
The land reform program has come and gone, national output from agriculture has dropped to 20 percent of 1998 output. The government needs to first do a land audit and identify land that can be targeted for extensive wheat, soya, cotton, maize and barley farming.
This can also be extended to beef and milk production in cattle breeding regions. Value chain financing can be used with partnerships from proven private players in agriculture and banks such as Agribank to minimise government risk or losses.
Adoption of the Rand
The benefits in adopting the Rand far outweigh the perceived strict financial compliance regulations that will be placed on the country by the South African government. Adopting the Rand as the official local currency will improve the country’s export performance as it makes our local industry competitive through benchmarking with the South African standard.
This has an effect of restricting imports into the country which stand at $5,3 billion (Over 50 percent of imports come from South Africa), as the rand is weaker than the stable US$ on the market.
Key industries that will also benefit include transport, tourism, banking and ICT as our local prizes have been very uncompetitive in the region. Run-away inflation, three tier pricing, high interest rates on lending and exchange control indiscipline will also be corrected through this way.
Promote exports in new markets Last year, exports of tobacco and minerals racked in close to $3 billion for the country by October 2017. That figure can be doubled with development and promotion of new export markets for not just the usual commodities but for other attractive locally produced goods such as leather, tea, sugar, cement and wood.
New markets such as the Asian tiger nations, West Africa and South America should be explored to grow export capacity locally and earnings for the country.
- Victor Bhoroma is business analyst with expertise in strategic marketing and business management aspects. He is a marketer by profession and holds an MBA from the University of Zimbabwe (UZ). For feedback, mail him on [email protected]