Imports drop 20 percent in July as trade deficit narrows to US$1,5 billion

Imports drop 20 percent in July as trade deficit narrows to US$1,5 billion
Finance Minister Patrick Chinamasa and the Reserve Bank of Zimbabwe governor, John Mangudya

Finance Minister Patrick Chinamasa and the Reserve Bank of Zimbabwe governor, John Mangudya

THE country’s total import bill dropped 20,34 percenr in the seven months to July weighed down by a number of factors which include troubles in the external payment systems, import restrictions placed on selected products by Government, troubles in the external payment systems and weak industry demand for raw materials.
Weakness in the South African rand, whose country is the biggest trading partner, has also contributed with the rand trading around 12.45 on the dollar last year against last month’s 13,9.

Data from Zimstat shows that imports fell to US$2,89 billion from US$3,62 billion same period last year. Month on month, July imports fell 8,09 percent to US$394,83 million from June’s bill of US$429,58 million as foreign payments continue to face delays. The greatest effect has been payments to countries out of Africa where supplier terms are stricter. In the period, monthly imports from Singapore fell 31,5 percent to US$71,14 million in July from US$103.94 million in June and United States dropped 46,7 percent to US$4,83 million from US$9,08 million in the same period. The full impact of Statutory Instrument 64 of 2016 are expected to kick in from August going forward.

Imports from China totalled US$214.5 million but South Africa remained dominant at US$1,14 billion. There was an increase month on month on SA imports of 4,58 percent to US$176,37 million from US$168,64 million as the rand began to firm from lows of 15 to the dollar.  

South Africa has been most vocal about recent measures by Government to control the imports of selected products. At the ongoing Southern African Development Community Summit preparatory meetings in Swaziland, Industry Minister Mike Bimha said the issue of the SI had been discussed under SA-Zim bilateral engagement. The discussions also included the tariff phasedown of 112 products proposed by SA.

Though Zimbabwe continued to import goods which are readily available here such as sweet potatoes, carrots, natural honey, shelled macadamias, lemons; the rate is much lower than last year. Grape imports dropped to US$1,5 million from US$1,9 million last year. Apple imports were at US$2,58 million. Wheat worth US$51,11 million was brought in as the winter crop continues to decline while maize imports were at US$142,81 million. In spite of excess seed capacity, imports were at US$538 645.  Rice (bulk) at US$36,98 million is a fall from US$59 million last year. Crude soya bean oil used in cooking oil manufacturing was at US$61,79 million.

Petrol imports were at US$235,14 million, down 7,7 percent against US$254.89 million last year. Diesel was at US$445,8 million against US$491 million last year while electricity imports rose to US$76,64 million from US$28,8 million and against exports of US$3,5 million.

Total exports in the period were at US$1,3 billion, a 10,2 percent drop from US$1,45 billion last year. As a result, the trade deficit narrowed 27 percent at US$1,58 million against US$2,16 million last year.

Flue cured tobacco exports at US$274,35 million were 5,9 percent lower than the US$291,5 million sold last year. On the minerals side granite exports increased to US$22,5 million from US$15,09 million last year, nickel near flat at US$152 million and diamonds at 77 million against US$123,6 million last year due to the consolidation disruptions.

Gold exports were at US$447,23 million, an increase of 20,85 percent as global prices firmed against last year while government has also put in place measures to get more output from the small scale mining sector.  Platinum exports were down to US$26,29 million from US$35,51 million same period last year.

The RBZ in May announced a five percent export incentive which will be funded through a US$200 million Afreximbank facility. Some countries in the region (e.g. South Africa), provide export incentives to facilitate their companies to do business across borders.

Generally, manufacturing sector’s export performance between 2014 and 2015 indicates that the sector’s capacity to export is declining. In addition, the process of obtaining export documentation (permits/licences) and achieving export compliance makes it cumbersome to export. The challenge with the permits is not only their cost but also the time it takes to process them, which in itself is a higher cost.  ZimTrade is currently pushing for export reforms while the organisation is at the forefront of calling for the addressing of trade facilitation issues for the country to realise an export economic growth. FinX

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  • Peter Kozelj

    “As a result, the trade deficit narrowed 27 percent at US$1,58 million against US$2,16 million last year.”
    Dear Financial gazette, if anybody, your staff should be able to distinguish between millions and billions!
    Better shut up if you don’t know what you’re talking about.

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