Timothy
Tawanda Musarurwa
The country’s import bill ticked up in September as Government eased lockdown restrictions, bucking a decline that appeared to have been brought about by Covid-19.
For the first eight months of 2020 imports were down from prior year comparative.
Imports declined to US$2,963 billion between January and August this year from US$3,162 billion recorded during the same period in 2019, representing a 6,3 percent decline.
Resultantly, the trade deficit for those eight months declined by 44 percent from US$719 million last year to US$400 million.
But that trend has shifted to “default settings”, with imports rising by 9 percent in September, compared to August.
In the same month, the country’s exports increased slightly by 2,4 percent from US$389,3 million in August to US$398,8 million, latest figures from the Zimbabwe National Statistics Agency (ZimStat) show.
The Agency highlighted that in September alone, the country exported goods worth US$398,8 million, as opposed to imports which stood at US$441,4 million.
The performance of Zimbabwe’s imports and exports in September resulted in the country recording a trade deficit for that month of US$42, 6 million.
In Zimbabwe there have long been various arguments in support of restricting imports, including the local industry support argument, the anti-dumping argument, the environmental protection argument, the unsafe consumer products argument, as well as the national interest argument.
But imports are not necessarily bad, especially if the bulk are critical imports, that is, imports that go to the productive sectors of the economy.
For Zimbabwe, raw materials, equipment, electricity and fuel are some very critical imports that rank high on the country’s imports list.
And with some producers now having improved access to foreign currency because of the Reserve Bank of Zimbabwe (RBZ)’s foreign currency auction system, it could only be expected that the levels of critical imports would rise.
The Confederation of Zimbabwe Industries (CZI) noted as much in a recent review.
“CZI is of the opinion that the foreign currency auction trading system has ushered in a breath of fresh air and the economy has derived many positives from the newly instituted foreign currency management system,” said the local industry representative body.
“The positives include the stability of the exchange rate on both the formal and informal markets as well as the slowdown in inflation. There has been increased access to foreign currency by businesses.”
As per policy, the productive sectors continue to be the biggest beneficiaries of the foreign currency auction system.
In this week’s foreign currency auction, the raw materials segment accounted for the bulk of the allotments yesterday, with US$12 million on the main auction and US$455 965 on the SMEs board.
Machinery and equipment came in second with US$4,38 million on the main and US$410 717 on the SMEs section. And consumables came in third on the main auction at US$2,38 million. On the SMEs section, consumables took up US$338 687.
Total foreign currency allotments this week amounted US$28,29 million, while total allotments since the introduction of the auction system are now edging towards the US$400 million mark, with the central bank remaining the sole source of forex on the auction.
Bongani Ndlovu