Balance of payments narrows as exports increase

by | Jul 29, 2021 | Business | 0 comments

Nevanji Munyaradzi Chiondegwa

The Zimbabwean Government`s is set to fulfil its commitment to one of the most critical elements of the National Development Strategy 1, of cutting the down the negative balance of payments.

This was shown by the reduction of imports and the increase in exports in the period January to May.
Balance of payments is the difference between what you import and export in monetary terms.

It is negative when you are importing more than you are exporting.

The latest figures from ZIMTRADE shows that Zimbabwe is gradually reducing imports through production.

This is a result of country’s industrial utilization capacity rising leading to substituting of foreign goods with local goods.

The figures by ZimTrade show that exports grew by 9.5% while imports rose by 2.6% while year on year 31%.

Contributing sectors to the export growth are clothing and textiles grew to 76.62%, building and construction increased by 41.64%, while household furniture and leather grew by 29.3% and 16.33% and manufactured tobacco by 15.51%.

On the import side, Aquaculture grew by 81.6% and livestock sector increased by 71.74% while processed food rose by 49.35%.

While the country is currently still importing more than its exporting hence using more foreign currency than we are generating, the positive news is that, most of the imports are for plant and equipment, sign that Zimbabwe is aiming at increased internal production.

Commenting on the issue, Busisa Moyo, the Chief Executive Officer of consumable oils and soap maker United Refineries Ltd who also seats on the Presidential Advisory Council(PAC), “Growth does not just happen, corporations, individuals and communities create it. Growth is not easy or automatic. It is a godly trait”

The coming months will be good as exports shot up in June through increased gold deliveries and tobacco exports.

The government commitment to cut down the balance of payment via the NDS1 is to be achieved through the following measures which are already taking place;
-improved farming hectarage.
-dam construction
-increase industrial capacity utilization, hence why equipment import bill is on rise.
– increase in mining output.

It is pleasing to note that while previously, most of our foreign currency as a country was going towards food and cars, the trend has significantly shifted and now most of the foreign currency is going to capital equipment namely plant and equipment. This is a good sign of impending growth.

The authorities should keep an eye on smuggling both in and out of the country to ensure the positive impacts of the new trend.