Economic Updates - Featured - November 4, 2020

Zimbabwe spends about US$2.5bn annually on imports, Expert says

ZIMBABWE  spends about US$2.5 billion annually on imports which can be produced locally and saving the much needed foreign currency, Business Mail can report.

Presenting the State of the Economy and Economic Outlook report in the capital, Africa Economic Development Strategies Executive Director Professor Gift Mugano said the current dynamics in the economy are symptoms of an underlying cause which is two–pronged which is poor production and negative country perception.

“On an annual basis and on average, the country spends about US$2.5 billion on goods which can be produced locally and major imports are cereals (US$500m); soya bean (US$250m); fruit and vegetables (US$200m); tissue and paper (US$200m); steel (US$300m); fertilisers (US$150m); pharmaceuticals (US$300m); and a number of small imports which, when combined, become significant such as pampers, chewing gums, pencils,” he said.

The quick fix, he said, in our case, is expected to come from the anticipated agricultural sector on the back of good rains, pfumvudza, smart agriculture and the proposed establishment of a market-based agricultural sector.

“Combined, these factors will help the country to make savings in excess of US$500 million on cereal importation plus another US$250 million on soya beans which, if achieved, will help the guarantee the effective performance of the auction system and effective price discovery.

“With improved output from the agricultural sector coupled with improved availability of foreign currency, the manufacturing sector is anticipated to recover since it draws 70% of its raw materials from the agricultural sector,” Professor Mugano said.

Our brand equity, as a country, he said, is at an all-time-low because of political tensions and various policy inconsistencies.

“The country’s perception is rendered negative by corruption, abductions, arrests of activists, restrictions on EcoCash and suspension of stock exchange (though it was later lifted), introduction of the Zimbabwe dollar and in less than a year we are back to US$,” he said.

“These repel investments (both domestic and foreign) which is key in fostering economic growth which is important in driving the country into an upper middle income status.”

Professor Mugano added that: “Unfortunately, if we don’t address these twin problems we will have to forget about achieving the upper middle income status by 2030.”

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