Gono warns Zimbabwe on trade imbalance

RESERVE Bank of Zimbabwe governor Gideon Gono has rebuked the country on its over-reliance on finished goods from SA, which account for nearly 65% of all imports into Zimbabwe.

Mr Gono on Tuesday warned that should the trade imbalance between SA and Zimbabwe persist, the country’s hopes of reviving its ailing manufacturing sector were futile.

The governor’s comments came as a two-day investment summit opened in Johannesburg yesterday. The summit is also aimed at dispelling fear over the country’s looming elections.

Prime Minister Morgan Tsvangirai was also expected to give the keynote address.

Trade between SA and Zimbabwe increased last year to $5.9bn from $4.6bn in 2011; with a breakdown of the figures indicating that Zimbabwe imported goods worth $3.2bn from SA, while exports accounted for $2.7bn last year.

“We are seeing the growth in our exports but we remain very worried by the extent and level to which we are depending on imports, particularly of finished products. We cannot build a strong economy by exporting jobs,” Mr Gono said.

“We need to strengthen and capacitate our local industries, that is the only way we can stop the haemorrhaging of foreign exchange that is unnecessarily going out of the country; that is the only way we can reduce unemployment”.

According to the industry and commerce ministry, the factory capacity utilisation for the manufacturing sector is at 44%.

While this represents a marked improvement from the 10% level recorded in 2008 during the height of Zimbabwe’s economic meltdown, attempts to improve have been weighed down by the SA imports, which are much cheaper.

Last month, milk manufacturing giant Dairibord Zimbabwe announced it would shut down its two milk plants in Bulawayo and Mutare in Manicaland, a move it said was meant “to align its cost structure with its volumes”.

Dairibord’s closure of its two key plants signals the continued wave of de-industrialisation that has resulted in the closure of about 100 companies since 2010.