Zimbabwe's trade deficit narrows

ZIMBABWE'S trade deficit narrowed by 14,5 percent (US$98 million) to US$576 million in the first three months of the year from the same period a year earlier, as exports jumped 15,7 percent to US$724 million driven mainly by mineral exports and tobacco.

The influx of foreign goods — notwithstanding the implementation of Statutory Instrument (SI) 64 of 2016 that restricts the import of more than 42 goods — however continued as imports were flat at US$1,3 billion compared to last year.

Though there is a noticeable increase in the import of capital goods, significant amounts are still being spent on miscellaneous items. Notably, about US$3 million and US$92 000 was spent importing pampers (disposable napkins) and tooth brushes, respectively, from South Africa.

Exports

Figures from Zimbabwe Statistical Agency (Zimstat) indicate that cumulative mineral exports at US$362 million contributed about half of the receipts.

Gold contributed the most (US$182 million), followed by nickel ores and mattes (US$99 million); ferrochrome and chrome concentrates (US$114 million); industrial diamonds (US$25,5 million); and platinum (US$14 million). Tobacco exports topped US$203 million during the review period.

Most of the local goods were destined to South Africa, which took in US$561 million worth of commodities, followed by Mozambique at US$88 million. What has been most worrying to policy makers is the export of raw and semi-processed goods, which the current trend shows.

Imports

But much of the improved export performance was tempered by soaring imports.

Unsurprisingly, the bulk of the imports were from South Africa — Zimbabwe's biggest trading partner — which exported goods valued at US$520 million to Harare. Singapore was the second-largest exporter to Zimbabwe, with goods worth US$279 million.

The lingering impact of the drought-plagued 2015/2016 agricultural season continued to take a toll on the economy, as the country shipped in maize and wheat worth US$118 million and US$34,2 million, respectively. A further US$291 million was spent on fuel, while electricity purchases stood at US43 million.

With locals having shelled out a staggering US$3 billion, importing 323 600 vehicles from 2009 to March 2017, motor vehicle parts and accessories were one of the biggest contributors to the import bill.

The switch from cash to plastic money also drove the import of Point of Sale (PoS), a key component of electronic transactions, to US$1,4 million. However, industry says there is no reason to be concerned about the trend as there is an exponential increase in capital goods imports.

Confederation of Zimbabwe Industries (CZI) vice-president Mr Sifelani Jabangwe said soaring imports do not mean that SI 64 was ineffective.

"Yes, the (import) bill has not changed but you have to note the changes in the bill's composition," said Mr Jabangwe. "If you look at the 2017 bill, you will notice that although some finished goods are still there, capital goods now make up a large chunk of it as industry re-equip and retool buoyed by SI 64 success. "So sooner than later, the bill will fall because you don't retool everyday as people do when importing finished products," he said.

For example, imports of hydraulic turbines, water wheels and regulators were measured at US$28 million during the three-month period.

SA stats tell a different story

There are however marked discrepancies between figures provided by Zimstat and those published by the South Africa's department of trade and industry (DTI) insofar as trade between the two countries is concerned. While the local statistical agency claims that the country shipped more goods worth US$561 million to Africa's biggest economy during the first quarter of the year, SA authorities actually captured a decline to US$31 million. But this does not tally with the figures from both agricultural and mineral exports.

Gold exports to SA alone were measured at US$182 million. Again, the same difference — though not marked — is reflected in imports, with SA's DTI claiming Zimbabwe absorbed goods worth US$485 million in the three months to March, compared to US$519 million gauged by Zimstat.

Attempts to get an explanation from Zimstat were fruitless by the time of going to print.

Smuggling and beneficiation

There are however worries that official statistics do not fully capture the value of goods that are being dumped on the local market.

The Zimbabwe Revenue Authority (Zimra) recently told The Sunday Mail Business that conservative estimates suggest that the country could be losing more than US$1 billion from fuel smuggling alone.

At US$1 billion, smuggling from only one sector of the economy made up almost 36 percent of the country's exports last year (US$2,8 billion).

"Since smuggling is done clandestinely and most of it goes undetected, it is difficult to quantify, but the cost could run into billions of dollars. . .

"But just to give a rough indication, in our discussions with Zinara (Zimbabwe National Road Authority) as the Zimra board, and for traffic through designated entry ports, it has been estimated that only 40 percent of all trucks claiming to transit through Zimbabwe actually do so. . .

"These trucks could be carrying vehicles, electrical goods, consumption goods, clothing etctera," said Mrs Willia Bonyongwe, Zimra's board chairperson, to this paper recently. But Government is currently working on the establishment of a National Ports Authority (NPA) as a way of improving efficiency at the country's ports of entry to curb smuggling. Transport and Infrastructure Development Minister Dr Jorum Gumbo indicated at the beginning of the year that the law that will give legal underpinning to the envisaged entity is currently being drafted.

South Africa has an equivalent of this authority and its mandate is to take a lead in sustainably running ports of entry affairs and coordinate state stakeholders. The Department of Immigration, Zimra, the police, Ministry of Health, the Environmental Management Authority and security agents are some of the state actors at all the country's ports of entry. It is understood that the NPA will play a supervisory role over these actors to improve efficiency. Separately, the country is pursuing various projects to add value on exports, most of which are shipped in raw or semi-processed form.

The Ministry of Mines and Mining Development announced on May 17 that Government had agreed on a US$200 million deal with Australian company Kelltech Ltd for the construction of a platinum refinery.