Online Reporter
ZIMBABWE is earning its growing prosperity by producing and selling commodities and products that others want to buy with exports rising to yet another record of US$1,679 billion in August, more than 14 percent above the previous monthly record, set just a month earlier.
With imports remaining virtually steady, rising just 0,2 percent from July, the trade surplus rocketed to another record of US$526 billion, 64,5 percent higher than the previous monthly record, again set a month earlier in July.
Until August last year Zimbabwe had almost always imported more than it exported with demand for imports controlled only by foreign currency shortages over the 60 years since the mid-1960s, the last time the country sold more on foreign markets than it bought. In that month exports finally rose above imports, admittedly by just US$6,9 million, but we had to start somewhere.
The next nine months saw some ups and downs, but generally the value of the positive monthly trade balances totalled more than the value of the negative balances. Then in June this year there was the present trend of large and ever rising trade surpluses each month.
To put the July figure into perspective, the surplus on the trade account in August was 31 percent of the total value of exports and almost 46 percent of the value of imports. This sort of performance explains why we maintain macro-economic stability with little exertion. We earn enough foreign currency from our exports to supply importers with all they can afford, the constraint now being how much money importers have, not how much foreign currency is available.
The control of money supply has been critical in taming inflation since the beginning of last year, with this taming reflected in the annual inflation rates in the low single digits seen since January this year after the last of the big monthly jumps of 2024 fell out of the calculations for the previous 12 months.
At the same time the control means that importers have to earn the money they need or want to spend in other countries, rather than manipulate finances and exchange rates.
This is reflected in what we do actually import. Diesel, petrol, JetA1 and other petroleum products made up 22,2 percent of imports, the largest single block and made up entirely of consumables, with zero asset value.
But machinery and mechanical appliances were second with 15,5 percent of the total. This is the equipment that is adding value by processing minerals and building up our industrial base. That particular block of imports is part of the cost of adding value to exports and ensuring that we keep consumables down on future import lists by making stuff ourselves. Fertilisers come in third, vehicles fourth and electrical machinery and equipment fifth.
The odd imported product on supermarket and bottle store shelves, or in tuckshops and little down town stores, do not really match the really big imports of essentials. And that is not driven by decree from the Reserve Bank of Zimbabwe or the Government, but by market economics. Businesses buy equipment; farmers buy fertiliser, and even here a lot of the imports are raw materials to make up the bags that are trucked to farms; everybody buys petroleum fuels. The consumer luxuries are nice, but not dominant.
Exports are dominated by commodities, primarily gold, platinum group metals (labelled as nickel matte in the statistics), other minerals led by lithium, and tobacco, but with horticulture now starting to form a second strand of agricultural exports.
This concentrated reliance on commodities is where potential dangers might lie, and while it is so essential to process the commodities before export.
Commodity markets and prices can fluctuate quite fast, but markets for processed commodities are more stable, and return better prices. Zimbabwe does have a lot of eggs in very few baskets which is why we need to diversify our exports more, something that happens largely automatically when we increase local processing to actual products.
We also need to continue pushing for new kinds of exports. Farmers are now selling more than just tobacco and industry is starting to sell products outside the country rather than just meet local demand. But we have a long way to go.
Although the statistics label gold exports as “semi-processed gold” this is simply because our own refinery is not one of the very few around the world that is listed as a producer of banker bars. But the local processing is complete, and the foreign addition is largely just recasting with the required stamping. So we get full value.
Platinum group metals are still exported as concentrates, although as production rises and Zimbabwe moves into second place on world output, we obviously need our own refinery. It might be possible for either a single investor to set up shop and charge a fee for refining, or for the platinum mining companies to jointly own a refinery.
Lithium is now starting to be processed to lithium sulphate, with most producers expected to be doing so over the next year. But we still seem to export chrome concentrates rather than just ferro chrome to some markets. Final tobacco products might be tricky because of branding and legal monopolies in many markets, but we can certainly move up the ladder to intermediate products such as cut rag.
But the point is that we are progressing well.
A very short while ago, a monthly trade surplus of more than US$500 million would be considered a madman’s dream. Now it seems quite reasonable and natural, if not very pleasant.
