RESERVE Bank of Zimbabwe governor John Mangudya says the country’s manufacturing sector should go a notch up in boosting exports after official figures showed that the sector raked in US$176 million last year, up from US$240 million in 2020, despite industry receiving the lion’s share of foreign currency on the country’s official auction system.
Use of antiquated equipment, competition from cheap imports and high operating overheads have been cited as some of the critical factors affecting the country’s industrial sector from being competitive both regionally and internationally.
Mangudya told delegates attending the Confederation of Zimbabwe Industries launch of the 2022 Economic Outlook Symposium that the apex bank will reconfigure the allocation of funds sourced from the auction system.
Massive closures and downscaling of large firms and yesteryear multinational companies has resulted in job cuts and growth of a thriving informal sector which, according to independent estimates, accounts for more 70% of the economy.
“Your exports were US$177 million but you used foreign currency from other economic sectors such as mining, so how do you think you will grow yourself from your own foreign currency? There is a confusion (misconception) which says if you earned US$9.7 billion, therefore the economy has foreign currency. It’s there, but it is not yours,” Mangudya said.
“You can’t use money which belongs to someone else. That money belongs to the likes of Zimplats, the likes of Unki, the likes of government in terms of accounts.” More than 50% of foreign exchange sourced from the auction system goes to the manufacturing sector, Mangudya added.
Official figures show that merchandise exports are estimated to have increased by 28% to US$6 315.2 million in 2021, from US$4 931.9 million in 2020, driven by increases in mineral and agriculture exports, while manufactured exports remained subdued.
Mineral exports underpinned merchandise export growth in 2021, growing by an estimated 38.4% from US$3 654.1 million realised in 2020 to approximately US$5 057.5 million in 2021.
On the global front, safe-haven demand in the face of Covid-19-induced loose monetary and fiscal policies supported prices for gold and other precious minerals.
Agricultural exports, according to central bank statistics, are estimated to have grown by 7.7% from US$871.7 million in 2020 to US$939.1 million in 2021 led by tobacco exports, largely on account of the good agricultural season the country experienced.
Manufactured exports, however, remained somewhat subdued, weighed down by lower jewellery and sugar exports amid low competitiveness and, consequently, loss of key markets.