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.
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.
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.
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.