adminthe first half of the year remained sluggish with the country literally having a negative trade balance with all its trading partners.
“The outlook remains unpredictable,” said ZimTrade. “Export performance for the first half of 2012 has been sluggish with imports continuing to outperform exports. Although the Government launched the highly credible industrial and development policies on March this year, implementation is being threatened by lack of resources.”
The National Trade Policy, seeks to have a trade function as the engine for sustainable economic growth while facilitating the productive sectors towards export orientation and international competitiveness.
It seeks to ensure Zimbabwean companies and households enjoy continued access to a wide range of high-quality goods and services.
In addition, the policy seeks to increase exports, promote the diversification of Zimbabwe’s export basket and increase export earnings by at least 10 percent annually from US$4,3 billion in 2011 to US$7 billion in 2016.
It will promote and enhance value addition of primary commodities and restore the manufacturing sector’s contribution to export earnings from 16 percent to 50 percent by 2016.
The policy is intended to consolidate and expand existing export markets and explore new markets while expanding into regional markets. It is expected to further enhance trade facilitation to expedite trade flows by reducing and eliminating barriers and give guidance on trade policy instruments such as tariffs, non-tariff measures and trade defence mechanisms to promote trade, protect industry from unfair trade practices.
The policy is being complemented by the Industrial Development Policy (2012-2016) that seeks to transform Zimbabwe from a producer of primary goods to a producer of value-added goods for domestic and export markets.
ZimTrade also expressed concern over the country’s export basket which is dominated by commodities such as mineral and raw agricultural products as opposed to manufactured or value added products.
On the other hand, imports are dominated by consumer good as opposed to productive machinery. This year, export revenues are expected to increase to US$5,2 billion, while imports are projected to increase to US$8,2 billion. This will translates to a trade deficit of US$2,8 billion, which is unlikely to be met by a surplus in the capital account.
This is due to low industrial capacity as a result increased product competition foreign competition especially from China. Zimbabwe’s manufacturing industry faces significant challenges including old and obsolete equipment, high labour costs, erratic utility supplies, high cost of short-term borrowing, skills drain and limited import protection.
South Africa-based trade expert Mr Gift Mugano said the success of the trade and industrial policies hinged on the availability of funding.
“The industrial policy in particular mooted the need to establish and industrial bank which will become a vehicle for industrial development through offering revolving funds,” he said. “The current liquidity challenges will pose serious threat on the success of industrial and trade policies.
“Industries will continue to grapple with the same problems of low capacity utilisation and high cost associated with low throughput which makes the country uncompetitive and cannot export even though the national trade policy has created an excellent institutional environment.
“Unfortunately, Zimbabwe has limited options to address these liquidity challenges in the absence of active monetary policy, good performance of export sector and substantial foreign direct investment. The only way out here is to establish a sovereign wealth fund using minerals.”
Online Reporter