Kudakwashe Mhundwa Business Reporter
Zimbabwe’s imports for the first four months of the year to April 2019 dropped 31 percent to US$1,5 billion from US$2,2 billion registered in the same period last year, as the country’s import bill continues to decline, Reserve Bank of Zimbabwe Deputy Governor Kupukile Mlambo has said.
Exports have, however, remained stagnant at US$1,2 billion the same as recorded in the same period last year.
During the period under review the country’s trade deficit narrowed 299 percent from US$1 billion in the first five months of 2018 to US$300 million this year.
Trade deficit refers to the amount by which the cost of a country’s imports exceeds the value of its exports. Simply put, a trade deficit implies that a country is losing most of its currency reserves to its trading partners.
Dr Mlambo told industrialists recently that the country’s imports had significantly lowered compared to the same period last year.
“ . . . For the balance of payment statistics for the first four months of this year, we have exported goods worth US$1,2 billion and we have imported goods worth US$1,5 billion so our deficit is worth around US$285 million.
“When you look at that amount, it’s much lower than we had last year during the same period, but when you add that and you look at what we call non-proofing (households) institutions they imported from their own retention goods worth US$235 million so again I am puzzled with these kinds of (money) that are available. Why is this market not working so clearly?” said Deputy Governor Mlambo.
Zimbabwe has been experiencing trade deficits due to low exports, usually of unprocessed items such as tobacco and minerals, and a ballooning import bill, mainly for consumptive goods.
The country is a net importer of fuel and capital goods. The firming United States dollar has also made Zimbabwe’s products more expensive and exports to the region uncompetitive.
Analysts say the trade deficit experienced last year shows the economy has less competitive exports relative to the region partly as a result of operating with a firm US
However, President Mnangagwa’s Government is battling to rebuild the economy by — among others things — improving the domestic investment climate, supporting key production sectors and reintegrating Zimbabwe into the global community.
With the economy structurally dislocated and production subdued in many sectors, a narrower trade deficit coming on the back of expanding exports and falling imports
will always help breathe new life in the economy.
Government has also been making several policy interventions to make sure that it grows its exports. Some of these include drafting of the National Quality Policy to make sure that local industries produce quality goods which meet the conformity standards of international markets as the country seeks to tap into the 1,2 billion people market which is being created through intra-African trade through the African Continental Free Trade Area (AfCFTA).
The Ministry of Industry and Commerce has also submitted that its strategic focus will be based on seeking private sector funding to the tune of US$2 billion to make sure that local industries retool to get production on board and cater for the export markets.