Weaker rand to hurt Zimbabwe’s trade competitiveness

via Bulawayo24 NEWS | Weaker rand to hurt Zim’s trade competitiveness  03 April 2014

The continued weakening of the South African rand should further erode Zimbabwe’s export competitiveness as South Africa is Zimbabwe’s major trading partner in the region, and only falls behind China across all its trading partners.

Trade data released earlier this week by the South African Revenue Service (SARS showed that the country’s trade balance switched from a R16.9bn deficit in December to a R1.7bn surplus in February And observers believe that the bump in South Africa’s trade improvement was largely due to the rand which has been on a weak trend since late last year.

Economic analyst Ronald Chizenga said Zimbabwe will suffer from South Africa’s import decline that will result from a sustained weaker rand.

“The weaker rand is boosting that country’s export earnings while at the same time making it expensive for it to import. This means that South Africa has had constrained import growth, which means a shrinkage in what we can sell to them.”

The US$, which is the major currency in Zimbabwe’s multi-currency basket, has largely strengthened against the rand which is also threatening the viability of the local manufacturers as South African products are now cheaper than locally produced ones.

Most local retailers are therefore compelled to sell South African exports, which means Zimbabwean products have also lost their competitiveness in the local market.

Last week, the Government moved in to ban the imports of fresh fruits and vegetables as exports of the same products, largely from South Africa, were flooding the market.

However, there have been minor indications that the rand may not sustain the weakening trend for long. For instance, on Monday, the data from SARS led to a slight firming in the rand on Monday to R10.52/$ – its best level in over three weeks. Zimbabwe can also take advantage of the ongoing platinum strikes in South Africa to ramp up its mineral exports, which account for a significant portion of the country’s exports.

Meanwhile, Zimbabwe’s trade development and promotion organisation, Zimtrade, will tommorow release results of a Local Export Manufacturing Capacity Survey, which it carried out in November last year in collaboration with the Confederation of Zimbabwe Industries.

According to Zimtrade, the survey is a baseline study to establish the local manufacturing export capacity to enhance industry policy lobby initiatives.

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15 comments on “Weaker rand to hurt Zimbabwe’s trade competitiveness
  1. Proudly South African says:

    Checkmate, you see how exports are reduced cleverly and not a Blankett ban without prior preparation. We’ve tactically weakened our Rand to make sure we capitalise on the stronger currency imports because unaffordable and eventually no longer making it to our market while at the same time making our high quality products very attractive to other countries. I foresee us reaching our 6% percent economic growth this year.

    • John Thomas says:

      South African products high quality Mr Proudly? Without tariff and regulatory protection almost all of South African products are not internationally competitive. South Africa for the most part is an exporter of primary commodities with a negative trade balance. This is nothing to crow about.

      Zimbabwe’s real exports got all over the world, not only to South Africa. That we buy most of our groceries in South Africa is because our government is murdering our economy. The dollar rand exchange rate is the very least of our problems.

      If/when we cure ourselves of the ZANU disease our economy will start to perform again

      • MikeH says:

        zanupf disease !!! Very apt, I like it and it’s when, not if, you cure it. A dose of lead is quite an efficient cure-all.

  2. Mixed Race says:

    I was not going to make comments today but what @Proudly South African has said above require correction to help him understand his country’s poor performance as far as quality of products.Your country has turned up to be a Chinese satellite state with fake items produced in China then stamped with false information made in South Africa.I have returned many so-called made in South Africa electrical items poorly wired eg a vacuum cleaner wired as a blower ie blowing out instead of sucking.I have no respect of the imports from your country because they sell fake Chinese items with wrong stamps to avoid SADC trade rules.We are not fools because I have rejected most of the items because they do not meet international standards.
    I hope you watched a tv documentary on channel 101 DSTV about your so-called Solar Geysers which your government spent millions of rands to try and cut down on electricity usage WHICH do not work because its all fake Chinese rubbish.In short your products have no quality at all because its China who sets your quality standards which are internationally questionable.

    • Proudly South African says:

      Sorry Mixed Race to burst your bubble. We in South Africa have Toyota corolla,Aygo,quantums and VW polos, jettas etc. that are build right here at home and exported to Austrialia,New Zealand etc. We also have Catapillar machines and industrial equipment that are also exported. By my count non of them have been recalled because of faults and all of that. I don’t know if Zimbabwe uses headache tablets like Grandpa which is Proudly South African.

  3. Changamire Dombo says:

    And Zim, what do you sell? Talk of superior quality yet you produce nothing! Zim quality is now history. Swallow your pride and accept that SA are better people and know economics better than the zimboz who talk too much but have nothing to show of it. Pathetic zimboz. Learn from SA how to run an economy pliz

  4. All Eyes On Me says:

    The Gukurahundis can ramp up their Platinum exports for all I care, but it will all mean nothing as long as the forex earned keeps fiancing gukurahundi Mugabe’s foreign travels to Malysia, Hong Kong and his numerous, never-ending hospital appointments there!!!

    Nothing is left for fixed investments – which is what generates long term economic development and economic viability and sustainability.

  5. moyokumusha says:

    @Changamire Dombo, your rand is now where the Zim dollar was in 2000, watch this space, for your demise is coming too. Just look at your gold output in comparison to 10 years ago and you will see the writing is on the wall.
    The value of your currency is determined by the demand for your goods, Mbeki should never have allowed Zim to continue its road to destruction when we removed the white farmers as that was going to impact on your economy too, why you may ask, well 25% of SA’s economy relied on Zim trade and 70% of Zims economy relied on the agricultural sector. Had that rot been controlled then both nations would have been in a better state today and possibly even a power house within the world. Think about it.

  6. Mixed Race says:

    @Proudly South Africa-you are right quoting these vehicles but they are all foreign cars assembled there not designed by local engineers.These companies moved to S Africa using the out sourcing principle due to cheap labour.
    This is exactly what I am saying that your country is too dependent on foreign products not locally developed industries.Out-sourced products maintain their country of origin quality,therefore it is correct that these cars are of high quality NOT the Chinese products you send to the other countries.

    • All Eyes On Me says:

      But investments do not flow into chaotic economic environments like the gukurahundi Republic. Yes, they could foreign OEMs, but what is wrong with that? If they are growing the economy and creating jobs, that is what matters. Besides, why venture into designing cars, a high tech industry sector before you have even developed basic skills of running primary industries like farming and agro-processing, which many Africans depend on for livelihood?

  7. Changamire Dombo says:

    @moyokumusha, talk much about rand and exchange rates coz they are weakened to stimulate demand. SA has a vibrand Reserve Bank with people who know the economic princples at international level, not mazimbo who brag about being intellectuals but but has the worst economy. U are both patriotic, yes, but , pathetic as well. U have to accept that you dont know and copy, then you may be better. SA is run by intellectuals and man of integrity, not just by politicians with the help of green bombers. no. SA is just miles by any standards to zimboz. Muri madofo akadzidza.zimboz, give us a break,

  8. mbizvo says:

    Most local retailers are therefore compelled to sell South African exports, which means Zimbabwean products have also lost their competitiveness in the local market.

  9. mbizvo says:

    Most local retailers are therefore compelled to sell South African exports, which means Zimbabwean products have also lost their competitiveness in the local market????????????????????????????????????????

  10. Mixed Race says:

    @Changamire Dombo-You really do not understand our sub-continent politics,you call people like Mr Zuma intellectuals.I call people like Thuli Mandosela Desmond Tuti,Nelson Mandela and a few others intellectuals because they have common sense and common wisdom in their daily lives.
    S African politics is slightly different from ours[Zimb] because they come from the same back ground of revolutionary parties except that they put in place strong safe guards in their superb constitution with the courts having the final decisions NOT the executive.This is why this Harvard trained lawyer Thuli Mandosela can stand her grounds for the public with total immunity.The misguided politicians there have tried to bull doze her with minimum success because of their well written constitution with no ambiguity on vital issues.
    What integrity is there if you spend millions of state funds to your private home my friend?Do not make a generalization of facts without proper investigation,both countries have some good politicians and very corrupt ones BUT the difference is in the safe guards in the constitution and final powers.

  11. moyokumusha says:

    @Dombo, wait and see, wait and see. Rhodesdian dollar was stronger than the US$ in 1980. R$1 = US$1.35. your R has never been there which is why I am warning you that with your R at 18 to 1 which is where we were in 2000, and your Government going the same way as Bob did, your destiny is going to be the same. We also have all ministers with umpteen degrees and big letters behind their names and we also had the few who tried their best but it is all futile when you put absolute power in the hands of a few. Nelson Mandela was your rock and stability but now he has gone the rot will set in and your fragile economy will crumble. I am a man with one degree, the university of life after the college of hard knocks. You need to take your blinkers off changamire.

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