Online Reporter
ZIMBABWE is now regularly recording rising monthly trade surpluses, showing we generally sell more than we buy in world markets and so ensuring that we are continually building up our net foreign currency revenue and earning our way to prosperity.
In July, this trade surplus reached just over US$320 million on exports rising to US$1,47 billion and imports falling to US$1,15 billion.
We need to add to the export earnings, now closing on US$1,5 billion a month, our invisible exports, with tourism being obviously the largest in this category, to see how much we are earning as a nation when all our individual and business contributions are added together.
While there has been the odd month over the last year when imports have exceeded exports, the general trend has been for us to export more than we import, and with our industrialists building up their capacity imports are actually falling while export earnings keep rising.
The surpluses on the trade account, added to the other foreign currency inflows from tourism and diaspora remittances mean we have an exceptionally healthy current account surplus, with far more foreign currency flowing in than flowing out.
The huge growth in exports has seen diaspora remittances, while extremely useful and still growing, being a far lower percentage of our currency inflows. We now earn many times more than we receive from our relatives and friends in the diaspora. Those remittances are now more cream on the economic cake than essential for survival of the nation, hence the invitation to Zimbabweans living abroad to be looking at investing back home, rather than just sending cash.
These growing surpluses are critical when it comes to finalising our debt arrears overhang with the debt rescheduled, but coupled to a realistic and agreed payment plan. Our growing economic strength makes this now financially possible, and with the foreign policy initiatives of the Second Republic now paying off politically, we should be able to reach agreements soon.
That will reopen access to development capital, although this time the Government is determined that any new loans will be for revenue producing infrastructure so we never fall into arrears again, with those taxes allocated in the budget to capital spending then being concentrated on social capital spending, such as new and upgraded hospitals, schools and other critical programmes that will never generate cash profits.
This switch into trade surpluses is all fairly new for Zimbabwe and is part of the growing dividend of the sensible economic and financial policies introduced by the Second Republic when the present Government took office. The liberalisation of the foreign exchange market, and its transfer to the commercial banking system using market related criteria for the first time since the middle 1960s, is one benefit which the entire business sector now relies upon.
Trade surpluses and a positive current account balances mean we have enough foreign currency for normal business activity without resorting to parallel markets or seeing growth stifled by foreign currency shortages. The surpluses, coupled with the strict conservatism over money supply, thus also ensure that we have a very stable exchange rate and the accompanying very low inflation.
We have been building up our exports partly through the rising global mineral prices for the bulk of our exports. But of increasing importance is the deliberate policy of ensuring far more beneficiation of minerals before they leave Zimbabwe, adding a lot of extra value and so earning the country more.
This can be seen with lithium, where the value of exports of this mineral this year has more than quintupled to US$1,247 billion. Some of that dramatic rise can be accounted for by mining more ore, but most of it comes from processing that ore locally with Zimbabwe leading Africa in this regard by shipping the first lithium sulphate from the continent this year and several more lithium sulphate plants coming up for commissioning over the next few months.
Lithium has now overtaken platinum group metals, listed for odd reasons as nickel matte in the export tables, as the second largest mineral export after gold.
Ores are not really that valuable. Gold is our biggest export, but we refine it locally and the only outside value added is the small sum from final casting into banker bars. Other minerals need to be processed to the same standards, so we earn the processing charges as well; since a lot of these comprise what the Zimbabwean staff of the processing plants are paid, we win double with better exports and more decent skilled jobs.
Our rising manufacturing sector, largely driven by processing and making products from Zimbabwean raw materials with imported raw materials an ever lower fraction, is the ultimate value adding and employment creating process.
Nor should we forget those invisible exports. Tourism, the largest by far, has the huge advantage that it can be built up with a wide mix of investment, from small family businesses to global hotel chains, so allowing a lot more ownership and opportunity by ordinary Zimbabweans.
Our vision of an upper middle income country means that we must earn that wealth that moves us up the ladder into those ranks, and as we are a fairly small country that means we need to be able to earn a decent living in regional, continental and world markets.
