Trade deficit falls by USD9.7 million, readies to bring mono currency.
Nevanji Munyaradzi Chiondegwa
Zimbabwe’s trade deficit decreased from US$179.8 million in July 2023 to US$170.1 million in August a fall of USD 9.7 million, as a result of an increase in exports by 7.7% from US$603.2 million in July 2023 to US$649.8 million in August 2023 and a lesser rise in imports of 4.7% from US$ 783.1 million to US$ 819.9 million in the same period.
Major exports comprised semi-manufactured gold (21.6%), Nickel mattes (17.3%), Tobacco (13%), and other mineral substances (21.5%). Main imports during the same period were mineral fuels and mineral products (19.4%), machinery and mechanical appliances (14.2%), vehicles (8.4%), and electrical machinery and equipment (6.6%). The imports represent a shift from the import of finished goods to equipment meaning industries are retooling.
The main export destinations in August 2023, were South Africa (30.3%) and United Arab Emirates (22.2%). Balance of trade shows the relationship between what the country has imported and exported. Exporting more than importing from others leads to a positive balance of trade so named because less foreign currency was used than the generated foreign currency. Zimbabwe has a negative balance of trade but it is better than that the deficit in July.
Two crucial terms are balance of trade and balance of payments and the key term remains TRADE. The balance of payments is similar to the balance of trade, the only difference is this includes other forex that have nothing to do with trade such as diaspora remittances, donations, and grants. While the country used more than it generated from actual trade, it was cured by diaspora remittance which is around USD175 million per month, and grants which are plus USD60 million a month.
Since the coming on board of Prof Mthuli Ncube and the Second Republic, there has been a continuous positive balance of payments.
Zimbabwe diaspora is the biggest thing to happen to Zimbabwe in terms of forex generation and is one of the reasons why whenever President ED Mnangagwa travels, he meets with the Diaspora and mentions them in almost all his national speeches.
Looking at the balance of payments, and considering that Zimbabwe’s deposits and money in circulation are plus 90% in USDS, it is clear that Zimbabwe has enough foreign currency to meet both local transactional purposes and import demand. No other country has attained this level in term s of forex availability except for the USA.
In other countries, all the unutilized forex is kept by the central bank and excess is replaced with local currency. Once we reach 100% dollarisation and are still able to meet import needs, Zimbabwe will then have the capacity to bring in ZWL without challenges other than perception and trust. In short, the only impediment to the intro of ZWL is trust, confidence, and perception