Zimbabwe continues to ramp up the importation of capital goods to boost local production and cut back on the importation of finished products for consumption.
Experts say the increased importation of capital goods will see the economy being anchored on production as opposed to the current situation where most of the goods consumed in the country are imported.
Between January and May, this year, the country imported food and beverages worth US$271 million with US$98 million worth of those imports destined for household consumption.
The US$173 million balance of the food and beverages imports were destined for industry consumption, probably in form of raw materials such as maize, crude soyabean and wheat among others.
Importation of finished products can, however, be curbed if industry invests in capital formation as reflected by increased level of capital goods imports.
According to latest figures from Zimstat, the country imported capital goods worth US$527 million in the first five months of the year.
While this figure constitutes 15,5 percent of total imports, it is the highest by category. Only fuel imports come close with an import bill that accounts for 13 percent of total imports.
The trend of capital goods importation is very encouraging, with the average monthly import bill for capital goods reaching US$105 million so far in the year. In 2020, the average monthly import bill for capital goods was US$81 million.
Experts say capital is the most important factor of production particularly in a developing economy such as Zimbabwe.
“What we are seeing now is the diversion of a part of currently available resources to the possible expansion of consumable output in future,” market analyst Mr Walter Mandeya said.
“This will, in the long term, lead to an increase in the size of national employment, income and output,” he said.
Confederation of Zimbabwe Industries (CZI) president Mrs Sekai Kuvarika, said the availability of foreign currency through domestic USD sales and the auction market had allowed industry to retool.
She said retooling was being done to replace and modernise existing equipment, expansion of existing capacity as well as completely new investments.
“This will have a positive impact on firm-level productivity as new equipment increases efficiencies, leading to the substance of the current economic growth path,” Mrs Kuvarika said with regard increased importation of capital goods.
Her sentiments were shared by industrialist, and CEO of United Refineries Ltd Mr Busisa Moyo, who said imports of machinery is “fantastic”.
Mr Moyo said importation of capital goods reflects capital formation and shows a couple of things such as confidence that manufacturers and producers have in the economy.
“It means that they are investing for the medium to long term to produce more goods in the country which is good. Capital goods show some level of confidence and I think that is going to augur well for the future and anchors the economy on production”.
Given what is happening in countries like South Africa where riots disrupted the movement of goods from within and beyond South Africa as well as the insurgency in Mozambique, Mr Moyo said Zimbabwean companies need to take advantage of some advantages in the local environment.
“We really need to take advantage of this and need to accelerate the peace dividend we have, the young population, the labour that is literate, probably need to be skilled but literate.
“A combination of that and capital goods, machinery and equipment is very good for the future of Zimbabwe and builds toward growth,” Mr Moyo said.
Meanwhile, for the month of May, Zimbabwe’s total import bill amounted to US$503 million.
Of that, US$108 million went toward importation of capital goods, US$163 million toward processed industrial supplies, US$55 million fuels and lubricants, US$59 food and beverages, and US$35 million on non-durable consumer goods.
Another CZI past president Mr Sifelani Jabangwe said these investments show that there is increased confidence as local industrialist are locking away money in these long term productive assets this is at a time when there is a shortage of long term finance.
“The government should therefore give more support to these local investors who are looking to expand operations.” — www.ebusinessweekly.co.zw.