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Zimbabwe exports on track for US$7bn target

by Staff reporter
04 Mar 2022 at 17:41hrs | Views
ZIMBABWE'S exports edged closer to meeting government's US$7 billion target by 2023, after rising by 37,3% last year, the country's export trade promotion agency said this week.

Exports climbed to US$6 billion in 2021, from US$4,39 billion the previous year.

But 2020 was a difficult phase in Zimbabwe's recovery efforts, with hard lockdowns forcing blanket firm closures and plummeting global consumption which affected exports.

Experts have argued that the 2021 rise came from a low base triggered by pandemic related economic shutdowns.

However, giving an update to Parliament this week, ZimTrade chief executive officer (CEO) Allan Majuru said Zimbabwe was on track to meet National Export Strategy targets.

"Zimbabwe's total exports in 2021 stood at US$6,03 billion, which is a 37,3% increase compared to US$4,39 billion recorded in the same period in 2020," Majuru said.

"The country is within reach of the 2023 target of US$7 billion as per the National Export Strategy. The thrust of the national export strategy is to grow exports of value-added products to increase the country's export earnings and increase local employment."

He said Zimbabwe made significant inroads into the exportation of value-added products. This was a shift from the traditional weakness where exports revolved around trade in raw minerals, agricultural commodities including tobacco and others.

Across Africa, concerns have been raised over the region's reliance on the exportation of raw materials. African governments are concerned that raw materials fetch less revenue compared to finished goods.

"Our exports of value-added products increased by 5,5% from US$383,5 million in 2020 to US$404,7 million in 2021. This is in tandem with increased export promotion activities we have been doing in strategic markets," Majuru said.

"In 2020, the horticulture sector exports were US$138,1 and it's a sign that we are getting closer to the 1998/99 figures of US$143 million. The major contributors to the exports in horticulture were citrus US$41,2 million, tea US$19,4 million, leguminous vegetables US$19 million, blueberries US$14,8 million and macadamia nuts US$14 million."

Despite rising exports, United States based credit ratings agency, Fitch Solutions forecasts Zimbabwe's trade deficit to widen to 2,4% of the gross domestic product owing to increases in informal activity and a rise in fuel prices.

The projection for the year is after Fitch Solutions forecasted the trade deficit to reach 2,2% of GDP in 2021. Last week, global superpower Russia launched an invasion into the eastern European country of Ukraine, resulting in oil and commodities prices spiking as investors hedged against a full-scale war.

As such, considering how Zimbabwe's fuel imports last year were US$856,8 million, accounting for 13,13% of total imports worth US$6,52 billion, fuel is expected to be costlier in 2022.

Further, the opening of the economy as Covid-19 cases decrease is expected to lead to increased informal activity resulting in increased demand for more imported products, a move that will add more pressure on imports.

"We expect the current account surplus to narrow further, to 1,5%, in 2022. We expect the trade deficit to widen to 2,4% of GDP as imports continue to outstrip exports," Fitch Solutions said in its new February 2022 Africa Monitor for Southern Africa report.

"Our oil and gas team expects the average price of brent to rise to US$72,0/bbl in 2022, while a ban on grain imports introduced in 2021 because of a substantial maize harvest is likely to be lifted, since Zimbabwe does not tend to experience consecutive above-average harvests."

According to central bank data, in 2021, banks processed foreign payments amounting to US$6,99 billion, representing a 45,2% increase from a 2020 comparative of US$4,82 billion.

The upward trajectory in foreign payments was largely on account of increased foreign currency supply from the auction system and exports, consistent with the increased capacity utilisation in industry, the central bank reported.

Increased industry activity means more demand for fuel and other critical raw materials while the lifting of restrictions means more travel by consumers thus adding more pressure for fuel.

Of the total foreign payments, fuel imports made up 12%.

"Demand for consumer and capital imports will remain solid as inflation slows further (we forecast annual average inflation of 42,5%), thus supporting spending power, and construction activity rises as the government invests in infrastructure (our infrastructure team expects the construction industry to expand by 2,8%)," Fitch said.

    Fitch Solutions also expects a fall in global commodity prices to add to the trade deficit for 2022.

Source - The Zimbabwe Independent