Zim trade deficit drops Dr Bloch
Dr Bloch

Dr Bloch

Zimbabwe’s trade deficit in the first quarter was near flat compared to the same period last year dropping 2.72 percent to $822,19 million reflective of slow spending in the economy in light of the liquidity crisis.
According to latest data from ZimStat, imports in the period amounted to $1,44 billion against $1,66 billion in the comparable year ago period.

Exports also came down to $625,92 million from  $813,57 million last year as the country’s competitiveness continues to suffer under the strain of a strong US dollar and high production costs.

A recent Zim-trade initiated study found that 40 percent of the companies surveyed are currently exporting their products whilst 60 percent of the firms are not exporting.

Of those currently exporting, the survey showed that they are exporting about 40 percent of their total production. The countries exports are now concentrated around minerals and tobacco.

In the period, the country exported flue-cured tobacco worth $85,77 million while on minerals, nickel exports amounted to $77,96 million, semi-manufactured gold at $120,47 million and unwrought platinum at $30,5 million.  The country also exported raw hides, with crocodile skins amounting to $9,08 million.

Month on month, March exports dropped 18,59 percent to $156,32 million from $192,03 million in February.

There was a notable drop in the imports of agriculture produce with only $761 worth of cabbage and lettuce imported. The ban on agricultural imports has pushed up the price of fruit and veg in supermarkets countrywide with a cabbage head now selling for above a dollar. The trade gap is expected to continue narrowing for the remainder of the year as the country’s ability to pay for imports is shrinking fast.

Economic analyst Dr John Robertson said the trade imbalance is likely to persist as the country is stressed financially. He said the drop in exports was largely due to the dip in gold production. Imports on the other hand had dropped as most firms cannot pay for produce.

“Most of the foreign suppliers are asking for cash in advance when it comes to Zimbabwean businesses and sadly we are not in a position to provide that as companies are stressed financially.”

Economist Dr Eric Bloch said the trend with the trade imbalance was of great concern.  “In fact it has been of concern for quite some time. It shows Zimbabwe is becoming more and more insolvent by the day.”

He said the country had to increase exports and this can be achieved by; firstly re-introducing export incentives and secondly by charging the right level of duties on imports.

“This will create a level playing field as currently imports are much cheaper. The right level of duty will ensure that products compete on quality rather than price.”

Another economist and University of Zimbabwe lecturer Professor Tony Hawkins said the trade imbalance was generally unsustainable. He said getting it right would be a matter of improving competitiveness of the economy. “But there is no quick fix as most of these solutions are long term.” Professor Hawkins once said that Zimbabwe’s problems were structural and long term in nature.

Dr Robertson said Zimbabwe has to invest in capacity and that entails attracting investors by changing policies.

Dr Bloch said there was generally a lot of interest on Zimbabwe at the moment and this had been noticed by the “tremendous support” the country received at this year’s trade fair.

Dr Bloch also commended government on at least showing intention on revising its indigenisation laws saying this will open up the country to investment. “What investors didn’t want was to put in 100 percent capital and get that investment reduced to 49 percent. That was unacceptable.”

Robertson said government had only made a “few comments” with regards indigenisation but the position with mining companies had not changed. “It’s still at 51 percent based on the resource on the ground. Will this be enough to change attitudes?” — FinX.

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