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Comment: Import exposure too excessive


We reported yesterday of the impending increase in the price of bread.

This would come as a surprise to many Zimbabweans who now believed that the country had conquered the inflation scourge.

But far from it; Zimbabwe’s dollarised economy has a shaky base which is at the mercy of many exogenous factors which policy planners here have no control over.

Bread is going up because of the heat wave and fires in Russia! This has affected wheat farming and with it prices have gone up. This is the downside of a globalising economy.

Zimbabwe is always bound to be on the receiving end because the country does not have a currency of its own. Our import exposure is worsening and we are in trouble.

We are importing too many items which we should be producing on our own.

The list of imports has grown as the economy continues to fail. The trolley of imports includes maize, wheat, fuel, electricity, milk, soft goods and the bulk of industrial inputs. The list is increasing, rather than receding and now includes currency.

While we appreciate that every nation imports what it does not have, our main worry as a country is that the level of import dependence is growing and making us vulnerable to global macro-economic shocks.

This year, Zimbabwe expects to increase imports of its main staple foods, wheat and maize.

National wheat production is expected to drop to a historic low just as demand for flour and flour products is increasing.

The rise in imports unfortunately coincides with a surge in global wheat prices as a result of production glitches in major producers such as Russia and Ukraine.

Maize production is projected to rise marginally, but demand is seen growing by a much higher magnitude.

The country’s recovery journey, which started last year, has also increased demand for electricity and oil.

Zesa has already indicated there won’t be an increase in the level of power supply for the next three to five years and deficits would be capped by imports.

Because of this, miners and timber producers have already asked government to be allowed to import power from regional suppliers on their own.

The deal is almost done. We just pray that nothing happens to Mozambique’s HCB, which will be supplying the additional power.

Other miners have resorted to the use of high-voltage generator power, which increases demand for oil imports.

The net effect of this scenario is that Zimbabwe’s failure to produce its own food and deal with challenges of power supply has increased the country’s exposure to global shocks, particularly sudden changes in prices and supply volumes.

For one thing, increased food and raw material imports, mostly from South Africa, makes us vulnerable to fluctuations in the rand/US dollar exchange rate.

Any appreciation of the rand will drag everyone down, from government and businesses to consumers.

This is a serious assault on the country’s sovereignty. It pours water on all pretensions by our rulers that Zimbabwe can go it alone.

But more embarrassingly, our economy is virtually being controlled from outside because we are not producing and we are using other nations’ currencies.

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