Zimbabwe’s exports to South Africa, its largest trading partner, recovered from a dip of US$126 million in 2014 (using the 1:16 exchange rate against the US dollar) to US$275 million last year, but there is still concern over the export of predominantly primary goods and the huge import bill that is hurting local industry.
Statistics from South Africa’s department of trade and industry indicate that for December 2015, Zimbabwe exported goods and services worth US$59 million from US$126 million in the same period a year ago.
Imports in the same month leapt to US$137 million from US$127 million in December 2014, resulting in a negative trade balance of US$78 million for the month.
However, last year’s growth in exports was dwarfed by imports from the Southern African country, which grew to US$1,6 billion from US$1,55 billion a year earlier.
Encouragingly, the country’s trade deficit with its trading partner for the whole of last year narrowed to US$1,3 billion from US$1,42 billion in 2014.
As a result, Zimbabwe improved to become the seventh largest exporter to SA from the it’s previous ranking as the 11th largest supplier.
Nigeria, which is incidentally the continent’s biggest economy, remains the largest exporter to South Africa, shipping in goods worth US$2,3 billion to the country in 2015, which is however a decline from US$3,5 billion in 2014.
But the country continues to be eclipsed by its neighbours such as Botswana which exported goods worth US$3,3 billion to the same country last year.
Experts say there is potential for the country’s to reclaim its economic status in the region if it manages to rehabilitate its industrial base.
The Confederation of Zimbabwe Industries noted last year that capacity utilisation in industry dropped to 34,3 percent in 2015 from 36,5 percent in 2014.
Reserve Bank of Zimbabwe Governor Dr John Mangudya said in the 2016 Monetary Policy Statement that the country’s high import bill was affecting local money markets.
“The country’s import absorption remains high relative to export performance, a development that has undermined efforts to sustainably build adequate foreign exchange reserve buffers and improve domestic money supply conditions. More significantly, a huge import bill has essentially drained foreign exchange resources realized from exports, credit lines, and remittances, thereby further tightening liquidity conditions with constraining effects on economic growth potential,” said Dr Mangudya.
It is thought that the drive towards adding value to commodities, which is one of the key aspirations of Government’s current economic blueprint, will increase the value of Zimbabwe’s exports going forward.
To date, there have been efforts, particularly in the mining sector, to push mining houses to establish local refineries.