From January to September 21 2018, $5 billion has been generated in exports, compared to the whole of 2016 when $3 billion was realised.
GOVERNMENT must develop industries that beneficiate exports and promote import substitution in order to boost the country’s earnings, Old Mutual Securities (OMSEC) has said. This is premium content. Subscribe to read article.
Zimbabwe exports largely unprocessed goods, which analysts say results in less earnings for the country, desperately in need of foreign currency.
“…the bulk of these exports remain largely unprocessed and relate to primary mining output,” OMSEC said.
“We reckon that developing value added industries would increase export value and the development of import substitution industries within the agricultural sector would go a long way in reversing the trade deficit,” the advisory firm said.
It said the growth in exports cannot be attributed to export incentives alone, but other government policy measures not limited to de-regularisation for small scale gold miners, facilities directed towards export industries, and lower export documentation requirements, amongst other measures.
This comes as trade promotion body ZimTrade recently said the country should stop exporting raw and semi-finished commodities as it was negatively affecting the economy.
The body said government must implement policies that compel companies to produce finished goods.
According to the Reserve Bank of Zimbabwe, since 2016, $12,6 billion in exports has been realised.
From January to September 21 2018, $5 billion has been generated in exports, compared to the whole of 2016 when $3 billion was realised.
“The downside has been the growth in imports which has been ahead of exports. Since 2016 total imports amounted to slightly over US$17 billion. The growth in imports can be attributed to the growth in aggregate demand as money supply growth from an expansion in Real Time Gross Settlement funds has been significant,” OMSEC said.
“The only plus side is that the country’s current account as a percentage of Gross Domestic Product has begun to shrink in the last five years given the growth in the economy,” it said.
The deficit is being financed by private sector borrowings and bank credit lines.
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