‘Zim’s balance of trade retards economic growth’

via ‘Zim’s balance of trade retards economic growth’ – The Zimbabwe Independent July 18, 2014 by Taurai Mangudhla

ZIMBABWE’S balance of trade is unsustainable and retards industrial growth, according to lobby group Buy Zimbabwe.

Buy Zimbabwe general manager Munyaradzi Hwengwere this week told parliament’s portfolio committee on industry and commerce the country needed ways to close the trade gap with a view to channelling resources towards reviving local industry and expunging the country’s debt which stood at US$9,9 billion in December 2013, far below the combined balance of trade since 2009.

“If we are able to reduce this gap, we can wipe out our national debt,” Hwengwere said.

In the first six months of the year, the trade deficit amounted to US$1,7 billion according to latest Zimbabwe National Statistics Agency (Zimstat) figures.

“What this means is we have taken US$1,7 billion outside,” Hwengere said. With US$1 billion, he said, Zimbabwe could build a company the size of Zimplats (Zimbabwe Platinum Mines) which has a market capitalisation of US$1 billion and employees 5 000 people,” he said.

“Out of the US$1,7 billion, you would be left with US$700 million change, enough to build a company the size of Mimosa (mining company) and you will be left with US$200 million change which is enough to open a company like Shabani Mashaba Mines.”

Hwengwere said the current trade situation where the country relies more on imports has seen local companies close shop and thousands of employees lose their jobs.

He took a dig at parliament for spending millions of dollars on imported vehicles, while local car assembly plants are suffering due to low demand of their products.

Recently, parliament spent US$10 million on top of the range double cab trucks for the legislators.

Hwengwere also said government, according to tax records accounts for most of the imports.

Zimbabwe’s oldest car assembly plant, Quest Motor Manufacturing (QMM), recently said its plant was now running at under 5% capacity utilisation due to low uptake of its product.
QMM Engineering manager Ezekiel Moyo said only 130 workers are currently employed compared to 1 500 at peak.

QMM appealed for government support through purchase of its vehicles to move volumes, improve on efficiencies and help the company remain afloat.

“We would want support from government through purchase of vehicles, not capital injections because we want to sell,” Moyo said.
Latest Zimstat figures show imports slid to US$2,99 billion from US$3,92 billion in the same period last year while exports also went down at US$1,22 billion from US$1,54 billion last June.
Hwengwere said government should come up with incentives to boost exports and help grow local industry.

He said, in South Africa, for instance, government gives rebate on every motor vehicle exported to countries such as Zimbabwe.

Hwengere also said the Standards Association of Zimbabwe should be adequately resourced to inspect and certify all imports into the country as a means of ensuring the market gets quality products.

“This will also protect companies from competing with cheap poor quality products that are being dumped into the country,” he said.
“The other problem is also our porous borders be it Beitbridge or the one in Mutare.”

Zimbabwe should ensure 50% procurement of all goods and services by public companies is done locally to promote industry.