Trade deficit widens

By Daniel Chigundu

THE gap between imports and exports continues to widen on the back of the country’s collapsing industrial production capacity and poor exports, Zimbabwe Statistical Agency (ZimStat) has revealed.

“Zimbabwe imported goods worth US$6.55 billion against exports of US$2.78 billion in the ten months to October 2013.

“Resultantly, the trade deficit widened by 25 percent to US$3.77 billion from US$3.02 billion recorded in August,”

ZimStat added that South Africa remained the largest trading partner accounting for 48 percent (US$3.17 billion) of the imports and 73 percent (US$2.04 billion) of exports mainly driven by the country's mineral outputs.

Since the land exercise Zimbabwe has been importing food from South Africa and neighbouring countries due to poor farming methods employed by the new farmers, coupled with erratic rains.

Late last year MDC-T shadow finance minister Tendai Biti said the problems facing the country cannot be patched up overnight and that the situation is set to worsen on the back of an under-funded agricultural season.

“I have move around the country and there has not been much in terms of land preparation, it means we are going to experience food deficit, agriculture has been underfunded, inputs distributed under the presidential scheme are too little and banks have only lent less than US$200million.

“Economic indicators show that there will be a serious shrink of 23 percent in the agricultural sector, 32 percent in mining while the economy will grow by between 1.5 percent to 1.8 percent next year,” said Biti.

Capacity utilisation is said to have deteriorated to below 39 percent owing to a cocktail of challenges chief among them expensive but unreliable water and power supplies, lack of spare parts and unavailability of cheap funds for recapitalisation.

The situation has also resulted in retrenchments of at least 300 workers per week with many companies downsizing or folding operations.

Seasoned market watchers Tetrad Securities said the situation is not health and requires immediate attention.

“Solutions are also needed for the widening trade deficit. We remain a net importer owing to capacity constraints in industry. The further 25 percent increase in the deficit to US$3.77billion shows that the situation continues to deteriorate which is not healthy.

“Furthermore, the deficit was mainly affected by the low exports that have been recorded this year. Value from exports was low owing to softening global commodity prices but what is worrying is the fact that production in most minerals has remained very low due to funding issues and this has made Zimbabwe extremely vulnerable,” said Tetrad.

Could this be the solution?

By Daniel chigundu

IN the last weeks of November last year a new political party (Transform Zimbabwe) was formed out of a prayer network and claims to be God’s own project to walk the country out of its political, economic and social misfortunes.

Zimbabwe is currently in a serious economic crisis underpinned by 80 percent unemployment rate, shortage of power, a huge wage bill, an unfunded agriculture season, domestic debt, sovereign debt, deindustrialisation, lack of FDI, lack of domestic savings and vulnerabilities in the Banking sector.

The coming onto the scene by Transform Zimbabwe has however resulted in many people wondering whether this could be the “Moses” set to guide the country’s exodus from poverty to the good times.

Interim president Jacob Chengedzeni Satiya Ngarivhume says his party will focus on re-engagement with western countries, building an inclusive and competitive economy and empowering every Zimbabwean through access to education, training and health facilities.

“In Prayer Network Zimbabwe, we have created a network throughout Zimbabwe to pray for the spiritual renewal of the nation and heal the social and economic fabric of our society. 
“Our objective is to nurture in all our members those values of integrity, trust, transparency, accountability and goodwill we would like to see in our leaders
“Our aim is to cultivate leaders from all walks of life whose inner spiritual transformation, both in their private and public life, makes them exemplars and role models for those they lead,” he said in a statement.

It remains to be seen how the party proposes to tackle the many challenges being experienced in the economy today which according to former finance minister Tendai Biti is a result of dearth of leadership with the craft competence ,the care and the vision to tackle the present challenges.

So dire is the situation in Zimbabwe that in the past few months there has been massive devaluation of business confidence, activity and wealth creation, with retrenchments, company closures and capital flight being the order of the day since elections.

The liquidity crisis is so bad that echoes of 2008 are now reverberating, there are now limitations on cash withdrawals, telegraphic transfers are now taking longer and cash at ATMs is scarce for the bigger Banks and totally extinct for the smaller Banks.

Statistics also indicate that up to August 2013 imports have been around US$5.6 billion against exports of US$2.3 billion resulting in a trade deficit of around US$3 billion

Tendai Biti said the problems facing the country cannot be patched up overnight as they are a structural problem reflecting collapse of the productive sector, adding that it is a supply side issue demanding a supply side solution.