Zimbabwe’s huge trade deficit continues to widen due to low exports and a growing import bill made up mostly of consumer goods, a new report has revealed.
Red tape and high costs are also making it harder for Zimbabwean companies to export, according to a report released by ZimTrade.
Exports in 2015 were $2.7 billion, falling 13 percent from $3 billion in 2014, the data showed.
“This is a worrisome trend at a time when exports should be the main driver for economic growth,” ZimTrade said in the report.
Estimates from the Reserve Bank of Zimbabwe show that in 2015, Zimbabwe exported manufactured goods worth $475.2 million, seven percent lower than in 2014.
The fall in international commodity prices hit Zimbabwe’s overall export figures as minerals constitute the bulk of Zimbabwe’s exports.
Value added or manufactured exports, which normally fetch higher earnings, performed poorly during the same period as Zimbabwe’s industry continued to struggle.
Seven representative manufacturing subsectors, namely clothing, furniture, food, beverages, engineering, leather and footwear as well as agricultural inputs, were selected for ZimTrade’s research.
In 2015, these subsectors constituted about 10 percent of total exports, down from 13 percent in 2014.
Leather and footwear recorded the largest decline, falling 71 percent to $12 million, followed by horticulture, down 43 percent to $25 million.
The furniture subsector recorded a decline of 42 percent, engineering 40 percent, food 27 percent and agricultural inputs 17 percent.
Processed foods remained the dominant sub-sector in 2015, constituting 32 percent of manufactured exports, having declined from about 41 percent in 2014. In 2015, the sub-sector’s exports also constituted six percent of total exports, having fallen from about seven percent in 2014.
“On a positive note, the clothing sub-sector registered an increase in exports of about 70 percent in 2015 compared to 2014. The beverages sub-sector also registered an increase of 13 percent to about $9 million in 2015. While this is a positive development, it is still far below Zimbabwe’s potential,” said ZimTrade.
The falling export numbers, ZimTrade said, reflect the depressed environment Zimbabwean manufacturing companies are operating in.
High transportation costs, a stronger US dollar and the erratic performance of utilities make Zimbabwean goods more expensive and less competitive on the export market. Exporters also say bureaucracy in obtaining export permits and other licences is making it harder for Zimbabwean businesses to export.
“The challenge with the permits is not only their cost but also the time it takes to process them, which in itself is a higher cost,” reads part of the report.
While high costs and bureaucracy slow exports in Zimbabwe, ZimTrade said other economies in the region, among them regional economic powerhouse South Africa, provide incentives to encourage their own exporters.
“There is, therefore, an urgent need for Zimbabwe to address trade facilitation issues and implement reforms if we are to realise an export led economic growth.”- The Source