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Let’s cut imports, push for higher exports

Everyone is aware that Zimbabweans want to import more than we export, and this is why foreign currency is in short supply and why the parallel market supplies currency for non-essentials at a significant premium.

The gap is growing despite the growth in exports, mainly minerals and tobacco, and Reserve Bank of Zimbabwe Governor Dr John Mangudya, who has the unenviable job of trying to manage the current account deficit, is clear about the reason. Zimbabwe’s economy is growing again, but largely in production for the local market, an import-substitution strategy, rather than for exports. This means local businesses require more foreign exchange for raw materials and packaging without supplying the extra exports to pay for these.

Substituting for an import also cuts the import bill, but the new factories opening, the accelerated success of Command Agriculture pumping serious money into the rural economy, where more than half our people earn their living, the extra jobs and the Government using the extra tax receipts to boost civil service salaries by a modest percentage all mean that demand for goods and services is rising. Factories that were trundling along at 30 percent capacity utilisation are now looking at 80 percent, with a consequent growth in imported materials, and Dr Mangudya has his hands full. He has also been having to find currency for businesses buying new machinery and equipment.

The Government is making efforts to boost exports, making it easier for foreign investors in mining and the like to come here and open shop. But a new platinum mine, for example, takes at least a couple of years to move from gaining the mining rights and starting to dig the hole to exporting significant quantities of metal. So there are no instant new sources of export receipts.

So it is fairly obvious that we need to control imports if we want to continue growing our economy and having a better life for all. We have been down this route before, with the huge switch at UDI and the total import controls that were imposed. That route cannot be followed now; we are in a global economy and have signed up for far freer trade. But that does not mean we cannot do something significant. Our biggest single import is petroleum fuels. We had started some substitution with ethanol, but then we did not grow enough sugar cane to feed the single plant. We should be getting back to 20 percent ethanol in our petrol as quickly as possible and looking for home-produced biofuel to mix with diesel. Slashing our petroleum bill by 20 percent will produce interesting extra foreign currency.

We could go further. Most people can cut their fuel consumption by 10 or 20 percent without much difficulty. A campaign can work; we saw something of what was needed when Zesa started its campaign to switch everyone to energy saving bulbs, now done automatically as everyone knows how much they have saved. Many businesses could slash their transport bills by tracking vehicles, finding the most economical speeds for each vehicle. Private motorists by more gentle driving, which does not necessarily mean slower driving though for some that would help, can make a significant difference and so have a few dollars a week extra for other purposes. Once a business or a motorist finds how much can be saved, then it will be like the light bulbs; they start to save as a matter of course. Everyone else also benefits, but the main way of getting change is to show individuals how they win.

Agriculture has made major inroads into cutting imports of basic necessities. We now grow our own maize again, for example, and seem to have stopped importing fresh vegetables and frozen chickens. But we need to continue accelerating winter wheat and other specialised crops without neglecting efforts and plans to boost exports. Here horticulture offers the best bet; we need to rebuild our markets.

Many people still prefer to buy foreign consumer goods, even when there are adequate local substitutes. The Buy Zimbabwe campaign is there, but perhaps it needs more resources and a bit more oomph to make people sit up and take notice. But as now many Zimbabwean goods are cheaper than the imports, more people are trying them out. A bit of competition will keep our producers on their toes; we do not need any return to a policy of buy local or go without. But if we checked out the local goods first before looking a foreign processed items we may well find we can save money by being patriotic.

There must be many other ways we can cut imports without degrading our lifestyles. We need to do this, and probably need advice at times. Success will be winner all round, for individuals with lower costs and higher wages, for companies with more production, and for the country with more wealth and more jobs.

Source :

The Herald

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