Exports are a vital cog of any functional economy, but the same cannot be said for Zimbabwe as it has suffered from trade deficit for several years, owing to a number of institutional and systematic economic inefficiencies which resulted in Zimbabwean goods and services being uncompetitive.
In the period March to May every year, Zimbabwe enjoys a steady flow of foreign currency generated through tobacco sales.
Beyond May, the challenge of limited foreign currency becomes glaring, posing questions as to what margins other export contributing sectors like mining and manufacturing are bringing in.
Government processes and procedures when exporting have also been identified as a worrying institutional bottleneck that has hampered regional and international trade, culminating in trade deficit that has seen the country being unable to generate sufficient foreign currency to sustain the economy.
The Minister of Industry and Commerce, Cde Mangaliso Ndlovu said there is no ease of doing export business in Zimbabwe, while archaic legislative frameworks are also impacting negatively on trade.
“There is an urgent need for Zimbabwe to self examine its legislative frameworks especially those that involve exports as most of them are outdated,” he said.
Zimbabwean goods and services have largely been uncompetitive due to inefficiencies and ineffectiveness along the production value chain, let alone an otherwise exorbitant pricing regime and as a result, they are finding it difficult to penetrate regional and international markets.
Lack of value addition has also been a challenge that has seen trade deficit widening, as 85% of what the country exports are raw materials mainly from agriculture and mining with less meaningful value whilst 15% are manufactured goods.
“Production costs for most producers of export goods and services are very high and as such not price competitive when compared to regional and international goods and services,” ZIMTRADE CEO, Mr Allan Majuru said.
Infrastructure deficiencies with regards to roads, rail and air transport have also contributed to trade deficit as some products requires the shortest possible time period from the farm to buyer especially horticultural produce which used to earn a lot of foreign currency for the country.