‘Zim needs to sustain positive trade balance’
TURNING the “dead” asset of land into a functional asset through title, concession farming and other innovative instruments around agriculture land, will help the country sustain a positive trade balance, industrialist and former Confederation of Zimbabwe Industry’s president Busisa Moyo has said.
Finance and Economic Development Minister Ncube is on record saying Treasury has managed to contain the twin fiscal and current account deficits, which over the years instigated instability in the economy.
Zimbabwe has over the years carried a current account deficit with the value of the goods and services it imports exceeding the value of the products it exports.
Presenting the 2019 Mid-Term Budget Review Statement, Minister Ncube said the fiscal and current accounts are now balanced and under control, while the tools of monetary policy have also been activated — thus representing an essential and complete toolkit for dealing with various macro-economic challenges facing the economy.
A surplus of US$196 million was registered in the first quarter of 2019 compared to a deficit of US$491 million for the same period in 2018, constituting a major improvement in the current account, said Minister Ncube.
“This reflects a sharp contraction in imports through import management, against a moderate increase in exports in line with export promotion under implementation,” he said.
Zimbabwe is still a net food importer. The country spent US$724 million on agricultural and food imports in 2018 most of which are imported by agro-processors. Top imported products by value were: soya bean oil, wheat rice, maize oilcake (for animal feed), soya bean flour and peanuts (groundnuts), according to the International Trade Centre.
Key country suppliers by share were South Africa (41 percent), Zambia (11 percent), Thailand (8 percent) and Mauritius (6 percent).
Mr Moyo, however, suggests that more needs to be done if the positive trade balance trend is to be sustained and that answer lies in giving agriculture due attention.
He said the manufacturing sector is agriculture linked and when agriculture succeeds “you will see the manufacturing sector growing.”
“So in our interventions in incentivising various sectors in the country we need to be mindful that when we impact agriculture we are not just impacting agriculture but we are also impacting manufacturing,” he said.
He said while treasury had done a “good job” in balancing the twin deficits the issue of contract farming is important.
Supporting contract farming, joint venture farming and outright corporate farming is key, he said.
“Turning the dead asset of land, unutilised land into a functional asset, through title, through concession farming, just having innovative instruments around how we turn agriculture land, and our arable land into productive land.
Restoring property rights and private land ownership is the motivational force that is lacking for Zimbabwe to solve the bulk of its problems.
Collateral value of land could help restore farmers’ access to billions of dollars-worth of credit that would immediately improve the country’s production volumes.
Economist John Robertson is on record saying “what attracted a wide range of manufacturing investors into Zimbabwe was that successful farmers could be relied upon to sustain steady deliveries of raw materials and export revenues.”
But when collateral value of land was cancelled, the flows of previously dependable raw materials slowed or stopped.
Mr Moyo said if we were going to keep going forward there was a need to make sure that agriculture is really paid attention to.
“I think we need to now have to shift away from those macro-economics, and look towards the micro-economics, and these sectoral micro-economics, because it also affects our ability to sustain the trend, the positive trade balance that you have alluded to.”
In the 2018/19 season, the agriculture sector is expected to contract by 15,8 percent in view of unfavourable weather conditions, exacerbated by the occurrence of Cyclone Idai, which destroyed crops, livestock, agricultural and other critical infrastructure in some parts of the country.
Output for most crops was, therefore, depressed despite an increase in the planted area
Cognisant of the prevailing severe drought and the need to revive the agriculture sector, Government will extend support towards the agriculture sector during the 2019/20 agriculture season, while nurturing the private sector to play a greater role in subsequent years.
As a result, the 2019 Mid-Term Review is setting aside $1,67 billion towards support of strategic crops of grain, soya bean and cotton under the following programmes.