Zimbabwe should broaden its export base to include semi-processed commodities as the performance of the sector remains sluggish, largely due to production shortcomings of the local industry.
Report by Mernat Mafirakurewa Acting Business Editor
Exports continue to be dominated by primary products, especially from agriculture and mining, with limited value addition.
Official statistics show that during the period January to October 2012, mineral exports accounted for 64% of exports, followed by tobacco at 19,4%.
“Also, the competitiveness of local companies in the global market remains subdued due to the use of antiquated machinery and old technology, a result of underinvestment during the hyperinflation era. Imports in turn are influenced by the need to import raw materials by industries,” said the African Development Bank (AfDB) in its monthly economic reviews.
“Capital account inflows as well as remittances still fall short of the requirements. Policy measures and strategies that boost production and competitiveness of locally-produced products remain critical pillars in dealing with the trade deficit.”
AfDB said the current account deficit could be reduced through increasing exports.
The regional lender said not only were weak exports a reflection of the local industry’s weak production capacity, but indicated the absence of diversification and value addition.
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“Thus about 83% of the exports are raw materials, pointing at the need to broaden the export base to also include semi-processed commodities. Overreliance on primary commodities, the prices of which are influenced by international developments, also leaves little room to influence patterns. Thus, beneficiation of the primary commodities will also go a long way to increase the value of exports.” Meanwhile, the Common Market for Eastern and Southern Africa (Comesa) launched the Regional Payment and Settlement System to foster deeper regional economic integration.
The system is expected to benefit exporters and importers in Comesa as it would ensure a faster, secure and reliable payment infrastructure within the region.
Under the system, central banks of member states would guarantee payment through prefunding of commercial banks accounts held with them.
The need for confirmed letters of credit and associated costs will be eliminated thereby saving traders huge sums of money.
