Zim-SA trade declines

By John Kachembere
Zimbabwe’s trade with South Africa declined to around $2 billion in the half year to June 2017, from $3,6 billion in the same period last year, latest officials figures show.

But economic experts cautioned that the huge decline could reflect declining imports as much as increased smuggling, as Zimbabwe’s manufacturing capacity remained depressed.

Figures released by the national statistical agency this week revealed that Zimbabwe’s trade deficit with its largest trading partner had come down from $1,3 billion a year ago to less than $76 million during the first half of this year after the country imported goods valued at $1,063 billion from its neighbour and exported products worth $987 million.

The country’s trade deficit with the rest of the world dipped slightly to $1,3 billion compared to $1,4 billion in the previous corresponding period.

“The latest trade figures are evidence of corruption and not of an improved trade balance,” economist, John Robertson, told The Financial Gazette.

“Shops are still carrying the full range of banned goods, which means that most products are not being declared at the border or there are some people who are avoiding telling the whole truth,” he said.

In June last year, Zimbabwe imposed import restrictions on more than 100 products to reduce the country’s huge trade deficit, which stood at $3,3 billion in 2016. The move was also expected to protect local manufacturers.

The list included furniture, baked beans, potato crisps, cereal, bottled water, mayonnaise, salad cream, peanut butter, jams, maheu, canned fruits and vegetables, pizza base, yoghurts, flavoured milks, dairy juice blends, ice-creams, cultured milk and cheese.

Economist Witness Chinyama said the narrowing trade deficit presented local companies with an opportunity to increase production.

“Local firms should improve production as South African products can no longer freely flow into the country, but the obvious challenge is depressed consumer demand due to the current liquidity crisis,” he said.

Chinyama noted that the import ban was aimed at resuscitating local industries and improve foreign currency retention by reducing imports.

The latest development also comes as President Robert Mugabe’s government has praised the controversial imports ban for improving capacity utilisation among local manufacturers.

“The agro-processing sector has generally performed above expectations and $154 million has so far been invested within that sector and edible oil sub-sector has increased capacity utilisation from about 10 percent to an average of 90 percent. This industry has also attracted $60 million in investment,” deputy Industry and Commerce Minister, Chiratidzo Mabuwa, said during a question and answer session in the National Assembly last month.

Mabuwa noted that the cooking oil industry also witnessed the entrance of new players that invested to produce edible oils and other related products.

“In addition, the yeast industry that almost closed managed to attract new investment and is now operating at 90 percent capacity utilisation.

“The biscuit manufacturing sector has gone up from 35 percent to 75 percent. The detergent industry has increased capacity utilisation from 30 percent to 60 percent, largely as a result of increased investment especially in new technology,” she said.

Government says the personal care products sector has witnessed an improvement in capacity utilisation from around 30 percent to an average of 50 percent, with local personal care manufacturer, Medichem, experiencing an increase in demand of over 300 percent.

The pharmaceutical sector — with the exception of Caps Holdings — is believed to have grown from around 30 percent last year to 65 percent, resulting in a variety of drugs being produced locally.

“The furniture sector has also witnessed increases in the production of bedding and related goods, with capacity utilisation improving from 45 percent to the current 70 percent,” Mabuwa said.
She also noted that one of the local furniture making companies had commenced exports of bedding within the region and increased working hours in order to meet demand for its products.

“Downstream industries such as label and plastic packaging suppliers have also realised positive results from the improvements in the production levels of various companies. As a result, capacity utilisation in the plastics packaging industry has increased from 37 percent to 60 percent. These companies are also investing in new technologies in order to meet the required standards,” she said.
Mabuwa also said new investment in the chemicals and plastic sector totalling around $3,5 million had been realised as a result of the ban.

“Nelspot Investments, Pro-plastics and General Belting invested in a bottle-blowing, PVC and high pressure pump machinery respectively. The cement manufacturing industry invested nearly $200 million; while the dairy sector mobilised a total of $746 000 and out of that, about $520 000 was used to purchase 400 heifers in September 2016 to boost local milk production,” she said. Financial Gazette