The ManicaPost
Kudzanai Gerede Business Correspondent
Government has been called to engage industry, shipping and clearance agents and other export-chain stakeholders in the formulation of a comprehensive country export strategy that will leverage the economy out of its widening trade deficit which has stifled domestic growth, trade experts have said.
Exports performance has taken a nosedive owing to a combination of low product output from key productive sectors and deterrent export processes that are cumbersome and costly.
This came out at the 2016 ZimTrade Annual Exporters Conference held in Harare last Thursday where bankers, exporters and trade experts outlined a myriad of complications around processes of exportation of goods and services in the country while lamenting the absence of policy guidelines that directly support export sector competitiveness.
Other countries like Mauritius have come up with comprehensive export strategies that have led to enhanced export performance through identification of competitive advantage, strategically diversifying their economy in line with global demands, simplifying costs and processing of export documentation, restructuring of efficient export supply chains and cultivation of conventional and new export markets.
Participants highlighted the need for an understanding at both industry and policy levels which specific commodities quenched global appetite that is critical for policy makers in initiating pro productive interventions for local export sector guided by what is required globally.
“Export sector is product-diversified and multi-market oriented. Trade agreements are as important for the export sector as a national export strategy is important to guide exporters on what and how they should produce for the intended export markets,” Mauritius Exporters Association (MEA) director Lilowtee Rajmun told delegates at the conference.
An export strategy ensures a country knows what is demanded outside and relevant support systems are in place to ensure the commodity output is maximised locally.
She also said as part of its export strategy, Mauritius had embarked on a priority based support initiative on selected sectors identified to be globally demanding as they seek to diversify the country’s export products and the results have so far doubled export receipts.
Mauritius has one of the continent’s highest Gross Domestic Products per capita owed to its impressive export account.
Central Bank figures have shown that the country’s export performance has largely determined overall economic growth with Zimbabwe posting its highest growth rate since dollarisation of 11,5 percent in 2012, the same year it reached peak exports of US$4,5 billion.
With the economy projected for a modest 1,2 percent growth by year end, analysts say Zimbabwe’s economic growth will be defined by its capacity to augment its low exports of around US$ 3 billion per year at a time the country was grappling with an unsustainable import bill of just above US$7 billion.
Recently, Government put an instrument (SI 64) to bolster the local industry against external products on the domestic market which was hailed by industry but lack of significant activity in the export sector has left analysts more worried as the domestic market alone is too small to propel sustainable growth.
“You can protect a local market but you cannot protect the export market, we can only incentivise it. The Zimbabwean economy needs to be export led, and not wait for organic demand locally,” chairman of ZimTrade Mr Lance Jena said.
The country is party to several international trade agreements which opens up broader market opportunities for local companies to boost aggregate demand and ultimately sales such as the Common Market for East and Southern Africa which has a cumulative population of over 600 million people.
“We need to resuscitate local manufacturing sector which has the capacity to pluralise what we are able to produce.
“Currently we are an exporter of raw products which limit our capacity to earn more,” he added.
Worryingly, the dependence on a few mineral commodities (platinum, gold, nickel and chrome) and tobacco as prime export products puts the country at a precarious position in two ways; firstly the volatility of international commodity prices have a direct bearing on export receipts in light of the recent commodity price plunge. Secondly, with tobacco being a seasonal commodity it means the country’s exports earnings will oscillate during the course of the year.
Reserve Bank of Zimbabwe Deputy Governor Kulupile Mlambo warned that not only will depending on a narrow export product base leave the economy vulnerable to international risks and shocks but also the over reliance on one export market yields the same while emphasising on multiplicity of the country’s trading partners.
His argument was mainly premised on the country’s high concentration on neighbouring South Africa as its leading trading partner (constituting over 60 percent of total trade) at a time the South African currency was devaluing, giving their exporters a competitive edge.
In 2015, trade between the two neighbours reached R30 billion with South African exports amounting to R25,6 billion while Zimbabwean exports hit R4,3 billion.
“We are trading in the Rand (exports) but we are pricing ourselves in US dollars.
“The biggest problem for our exporters is the exchange rate. Our local producers cannot compete with South African producers,” said Dr Mlambo.
But there are several other shortcomings at both industry and institutional levels that have siphoned exports potential.
At industry level, it has been noted that where there is an export opportunity, the country has not invested enough to leverage maximum profits from that particular commodity either in its raw form or as a by-product.
This is in light of under-pricing that has been noted particularly in diamonds sales and gold leakages by artisanal miners into the black market that have deprived the country of huge export profits.
“Are we deriving full value for our mineral exports, where do we have the competitive advantage and do we have an export strategy?” Barclays Zimbabwe managing director Mr George Guvamatanga rhetorically quizzed.
“If we look at some African countries accused of basing their economies on a single commodity like Botswana have done with diamonds, Nigeria with crude oil and Ghana before the discovery of crude oil did with cocoa, they have still managed to survive posting export figures of double or triple figure billions,” he added while accentuating the need to invest on competitive advantage.
Zimbabwe is estimated to harbour a significant proportion of world’s rough diamonds yet the country has only managed to secure less than one billion dollars from the diamonds since formal mining took place in Marange in 2009.
In contrast, Nigeria on average earns over US$150 billion in exports from a single commodity (crude oil) and last year only settled for just above US$75 billion in crude oil exports as a result of a 30 year record crude oil price plunge.
