Zimbabwe’s external trade data signals bright future

Tawanda Musarurwa

OVER the past five years, there has been a demonstrable increase in exports from Zimbabwe, driven by the Second Republic’s renewed economic diplomacy efforts, with shipments rising to US$7,2 billion last year.

However, imports — at US$9,2 billion — outstripped exports.

The Government has taken a deliberate engagement and re-engagement initiative that is premised on restoring traditional economic ties and opening new trade and economic frontiers.

New frontiers

Prior to 2018, the United Arab Emirates (UAE) was not among Zimbabwe’s top 10 export destinations but it is now one of the country’s big three trading partners.

According to the Zimbabwe National Statistics Agency (ZimStat)’s external trade statistics for February 2024, the UAE was Zimbabwe’s third-largest export market, accounting for 22,5 percent of the country’s exports.

Ahead of the UAE was China (27,5 percent) and South Africa (28,8 percent).

Overall, South Africa, China and the UAE accounted for around 79 percent of February’s cumulative exports of US$644 million.

In recent years, the Government has made deliberate efforts to strengthen bilateral ties with the UAE, starting with the signing of the United Arab Emirates-Zimbabwe Bilateral Investment Treaty in June 2018, which was ratified in November 2020.

There have also been several bilateral engagements between the two countries.

President Mnangagwa notably attended the Fifth Global Business Forum on Africa in 2019, as well as the World Government Summit in February this year.

And in another key development, earlier in January, the Zimbabwean embassy in Abu Dhabi opened a consulate in Dubai — the capital of the emirate of Dubai, which is one of the wealthiest of the seven emirates that constitute the federation of the UAE — a move that further enhances relations between the two countries.

Official figures show that bilateral trade between Zimbabwe and UAE grew from US$2 billion in 2022 to US$3 billion last year.

Recovering traditional ties

Zimbabwe’s relations with its traditional partners have improved as well.

Trade between Zimbabwe and the United Kingdom, for example, declined to a low of £126 million in 2021, from a peak of £461 million in 2018. But latest figures show an upward trajectory.

According to the UK’s Department for Business and Trade, total trade with Zimbabwe in the four quarters to September 2023 was £539 million, a 76,1 percent rise from the prior comparable period.

Of the £539 million, Zimbabwe’s exports to the UK were £275 million, while imports totalled £264 million.

And for 2023, total trade between Zimbabwe and the UK reached £633 million.

Growth in trade is widely considered the engine for economic growth and development.

With the sum of Zimbabwe’s exports and imports in 2023 totaling US$16,4 billion (with exports reaching US$7,2 billion, and imports at US$9,2 billion) – and going by the gross domestic product (GDP) figure of ZWL$119 trillion indicated in the 2024 National Budget – the country had a trade-to-GDP ratio of 81 percent at the end of 2023. According to research platform MacroTrends, Zimbabwe had a trade-to-GDP ratio of 47,3 percent in 2020, rising to 50,6 percent in 2021, and to 64,9 percent in 2022. The trade-to-GDP ratio (calculated by dividing the sum of a country’s imports and exports over a certain period by the GDP over that same period) is an indicator that speaks to the relative importance of international trade to a country’s economy.

Development economist Mr Prosper Chitambara said trade is vital for economic growth and development.

He, however, emphasised the need to enhance value addition and further expand markets for local goods and services.

“There is a positive correlation between trade on the one hand and growth and development on the other.

“But to maximise benefits from trade, we need to move up the value chain to make sure that we are selling processed products, as opposed to exporting raw commodities,” he said.

“It is also important that we are exporting more than we are importing so that there is a net inflow of cash, because that also then helps to ensure the sustainability of the country’s current account, and/or even external competitiveness.”

Meeting trade goals

With exports topping US$7,2 billion last year, the country is on course to meet its 7:14 export targets, as outlined in the Zimbabwe National Trade Policy Vision and Export Promotion Strategy (2019 to 2023).

The blueprint outlined the roadmap to the 7:14 export targets of US$7 billion by 2023 and US$14 billion by 2030 (from US$4,5 billion in 2018), in line with the broader goal to achieve an upper middle-income economy by 2030.

The country, however, needs to improve on its balance of trade position, which stood at US$2 billion at the end of last year.

On a positive note, the February 2024 numbers show that 57 percent of imported goods were for productive sectors.

The proportion of value-added goods also increased among exports.

According to ZimStat, of the total imports of US$725,4 million, 36,5 percent of the goods were industrial supplies, while another 20,4 percent were capital goods, such as machinery and equipment used to produce consumer goods or services.

But the list of top 10 export products during the period under review points to the need for expansion of manufacturing and beneficiation.

For February 2024, tobacco accounted for 33 percent of the country’s exports, followed by semi-manufactured gold (19,9 percent), nickel mattes (11,4 percent), nickel ores and concentrates (9,7 percent), ferro-chromium (4,2 percent), other mineral substances (3,6 percent), industrial diamonds (3,2 percent), other ores and concentrates (1,9 percent), chromium ores and concentrates (1,8 percent), and coke and semi-coke from coal (1,4 percent).

The manufacturing sector is key to economic growth to the extent that it allows for increased diversification of products.

Notwithstanding the almost unlimited scope of expanding the local manufacturing sector with new producers, data from the Confederation of Zimbabwe Industries pointed to the sector’s 2022 capacity utilisation levels at 56,1 percent, which shows the scope for expansion.

Significance of small players

In recent years, the local manufacturing sector has seen the emergence of new indigenous players, but these have struggled to access working capital because of their size.

Observers say proper support of small and medium enterprises (SMEs), especially in the productive sector, can boost economic growth as these entities expand.

In a 2011 paper titled “Positioning Zimbabwe Manufacturing Sector as a Growth Driver”, the Zimbabwe Economic Policy Analysis and Research Institute said:

“The Taiwanese successful story was hinged on the manner in which the SMEs sector was harnessed into the production process.

“The SMEs sector’s importance in the overall economic development thrust was recognised at the early stages and efforts were made to ensure that the sector also benefits from key incentives targeting the manufacturing sector.

“It was thus not surprising that they contributed significantly to the overall export earnings. In the same manner, the Zimbabwe SMEs sector can also be used as a platform for the growth of the manufacturing sector.”