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Business Reporter

Zimbabwe continues to experience a huge trade deficit due to the poor performance of exports exacerbated by a huge import bill, which is mostly consumptive. Exports in 2015 were $2,7 billion, representing a 13 percent decline from the year 2014, which was $3 billion. This is a worrisome trend at a time when exports should be the main driver for economic growth.One of the reasons for the decline in export performance is that minerals, which constitute the bulk of Zimbabwe’s exports, have been affected by the falling international commodity prices.

Value added (manufactured) exports, which normally fetch higher earnings, did not perform well during the same period.

The manufacturing sector’s export performance between 2014 and 2015 indicates that the sector’s capacity to export is declining.

Estimates from the Reserve Bank of Zimbabwe show that in 2015, manufactured exports were about $475,2 million, having declined by about 7percent compared to 2014.

Seven representative manufacturing subsectors namely: clothing; furniture; food; beverages; engineering; leather and footwear as well as agricultural inputs were selected for this analysis.

In 2015, these subsectors constituted about 10 percent of total exports, down from 13 percent in 2014.

2014 2015

Leather $40m $12m

Agric input $23m $19m

Beverages $8m $9m

Processed food $210m $153m

Eng products $55m $33m

Furniture $11m $7m

Clothing $6m $10m

The leather and footwear subsector registered the highest decline of 71 percent to about $12 million, followed by horticulture, which registered a decline of about 43 percent to $25 million.

The furniture subsector recorded a decline of 42 percent, engineering 40 percent, food 27 percent and agricultural inputs 17percent.

Processed Foods remained the dominant sub-sector in 2015, constituting about 32 percent of manufactured exports, having declined from about 41 percent in 2014.

In 2015, the sub-sector’s exports also constituted about 6 percent of total exports, having declined from about 7 percent in 2014.

On a positive note, the clothing sub-sector registered an increase in exports of about 70 percent in 2015 compared to 2014.

The beverages sub-sector also registered an increase of 13 percent to about $9 million in 2015. While this is a positive development, it is still far below Zimbabwe’s potential.

The above performance is a reflection of the difficult environment that Zimbabwean manufacturing companies are operating in.

Companies face numerous challenges that negatively impact on production and the conduct of export business.

These challenges, which reduce the price competitiveness of Zimbabwean products in the export markets, include cost of transportation, strengthening of the US dollar and the erratic supply of macro-economic enablers, among others.

In addition, the process of obtaining export documentation (permits/licences)and achieving export compliance makes it cumbersome to export.

The challenge with the permits is not only their cost but also the time it takes to process them, which in itself is a higher cost.

Some countries in the region (eg South Africa), provide export incentives to facilitate their companies to do business across borders.

There is, therefore, an urgent need for Zimbabwe to address trade facilitation issues and implement reforms if we are to realise an export led economic growth.

However, efforts by export-oriented ZimTrade which include taking local companies to specialised fair, market researches, provision of market intelligences and capacity building need to commended and supported as these are aimed at energising the country’s growth.