eBusiness Weekly
Business Correspondent
While Zimbabwe is evidently rich in terms of resource endowment, it is however still caught in the intricate web of an import dependent raw materials economy. Ironically, the country is also raw materials export dependent, and all of its big five (gold, tobacco, platinum, chrome and diamonds) in terms of exports are raw materials. As a country that is striving to pursue sustainable economic growth and development, how can that be reconciled in a way that ensures that value is preserved either way?
Granted, government has imposed a number of protectionist policies for the local industry with a view to promoting value addition and embarked on a number of import substitution programmes.
But what has been the net effect so far?
Has the country managed to achieve foreign currency savings out of all those initiatives?
While Zimbabwe may no longer be importing finished goods that are now under import management, it is now in a situation whereby it is importing a lot of raw materials to produce substitutes for those goods whose importation is now restricted.
And because of that huge reliance on foreign raw materials, a lot of foreign currency is still being wasted to import the raw materials that can however be made locally. And no foreign currency savings can be talked about here!
A few instances can be cited here. Firstly, you may have heard recently that Zimbabwe is negotiating for a $56 million facility with Afreximbank to support importation of fertiliser for the forthcoming agricultural season.
Again, government is also said to have made an arrangement with chemical companies to ensure that they get the much needed foreign currency to import agricultural chemicals. Oil expressers are also demanding US$5 million per week to import soya beans, crude edible oils and other raw materials. Companies like Truworths also import all their polyester fabric from out of the country. Time and space won’t allow us to exhaust the long catalogue, but you are probably seeing the picture already from this microcosm.
You will realise also that while the country prides itself in having abundant natural resources, it is really not utilising them and ends up worsening its trade sustainability by importing the things that can be locally manufactured.
Can’t fertiliser be locally manufactured here; can’t we make agricultural chemicals here? And given the vast and fertile agricultural land we are blessed with, shouldn’t we be embarrassed that we are wasting a lot of money importing the things that we can actually make locally? Talk of soya beans, fruits and vegetables!
And when you look at it, you will see that we are actually exporting our non-renewable resources for a song, while we are struggling to import renewable raw materials that we however have a capacity to produce on our own, locally. If Zimbabwe is to be proactive and direct all the money that it is using to import raw materials towards supporting and capacitating local farmers and manufacturers, how much will the economy benefit in terms of job creation, contribution to the taxman, apart from foreign exchange savings and reducing the excessive trade deficit?
To foster sustainable growth of the economy, Zimbabwe should actually be focusing on fully utilising its resources locally. It should provoke economic agents that we are exporting our cotton, gold, diamonds, tobacco, inter alia, in their raw state, for them to be just stockpiled by other countries for future use. It means we have betrayed our future generations whose future we should actually strive to safeguard. It is selfish for us to just think of ourselves and our present needs while we neglect those of future generations.
Zimbabwe is currently suffering from perennial deficits that are really weighing us down. From the 2018 budget strategy paper that Treasury released, you can actually realise that there is no end in sight to our trade and budget deficits in the medium term. But that situation can be transformed if we start to seriously introspect and cut on our losses.
