The Sunday Mail
Elementary economics reveals that any country which fails to rein in its import bill against declining export income is certainly digging its own grave. Yet, despite this seemingly obvious state of affairs, which, in the case of Zimbabwe, is made even much clearer by the existence of trade restrictions by major trading blocs such as the United States and multi-lateral financial agencies, we continue to exhibit suicidal economic tendencies while expecting our economic fortunes to improve.
We are surely insane to expect better results.
Granted, there has been a marginal decline in imports during the first quarter of 2014. While the jury is still out on the main reason for this, it does appear that the liquidity crunch is now beginning to bite all and sundry.
Even those who could import tonnes and tonnes of anything foreign are suddenly realising that without a thriving local economy supported by a robust industry, gains can only be short-lived.
In real terms, our import bill remains very high and unsustainable. According to Zimstat, our deficit expanded in 2013 to settle at US$4,4 billion, with exports remaining depressed at a lowly figure of US$3,5 billion against gross imports of US$7,704 billion.
In other words, as a country, we chose to send hard-earned money to foreign lands rather than invest in creating local jobs and wealth at a time most of our graduates are failing to secure gainful employment.
The sad part is that by pursuing this pro-foreign approach, we are killing the hen that lays the golden egg.
Regrettably, at a time we should be celebrating the emergence of a new group of entrepreneurs in the form of tobacco farmers, we instead do little to preserve the huge funds that come into the country.
In 2013 alone, tobacco farmers are said to have earned close to US$800 million. Available statistics show that most of that money was used to procure foreign-made goods, most of them consumptive.
The result is that we failed to ride on this success to unlock other areas of need such as wheat farming where, as we speak, the cultivated crop continues to deteriorate with imports once again increasing.
In fact, the situation has become so bad that at some point retailers resorted to bringing semi-processed bread into the country. Thankfully, the Ministry of Agriculture, Mechanisation and Irrigation Development was quick to ban importing dough before the practice could damage the milling industry.
Most recently, we have also noted the resurgence of debate on the importation of Japanese cars that are cluttering our roads.
In its current form, this debate has conveniently focused on consumer choices while neglecting a deeper analysis of the issues at hand. The first issue is Government’s last-minute reversal of its decision to ban the importation of such vehicles a few years back.
The second issue is that our major trading partner, South Africa, which is enjoying the fruits of our “outside-the-borders” disposition, has long banned these vehicles from not only being traded to its citizens but also being driven on their roads.
Botswana has also followed suit.
More importantly in this car debate, Government must bear the primary responsibility to reverse the trend. The enforcement agencies have watched with little interest the wilful and incessant refusal by Government departments, ministries and parastatals to abide by the imperative to buy locally-assembled vehicles.
Even as late as the current Parliament, overtures are still being made to bring in vehicles that are made in South Africa. The irony of it is that as these overtures are being made, the same Members of Parliament are bitter that their own allowances are not being paid.
Of course, like most public institutions, there is a failure to link their own day-to-day practices with the prevailing socio-economic conditions.
Government, through its various arms, is by far the largest buyer of cars. If our Government were to make a determined effort to ban the importation of foreign vehicles within its own ranks, Willowvale Mazda Motor Industries would be back on its feet in no time.
The chain reaction will also be felt across the entire value chain, which includes companies such as Chloride which make batteries; Astra paints, etcetera. At its peak, the motor industry could support up to 100 000 jobs.
There is no reason why we cannot go back to this scenario.
It was gratifying when President Mugabe, in his Independence Day speech, called for a stop to this appetite for imports at the expense of local products. We believe the call will help focus policy that appears to have been thrown into confusion by many, including some within Government who appear all too willing to swallow liberal economic ethos without question.
Ultimately, it is about building our competitiveness and enhancing sensitivity to market forces. We also think the idea of opening up borders across Africa is very good and must be accelerated.
However, this should not mean we must become blind to practices in those countries with which we trade. Not only does South Africa have a robust “buy local” initiative, but through their BEE programme and strong procurement laws, they provide subsidies to companies that export to Zimbabwe.
In 2013 alone, the motor industry received over R10 billion in export subsidies.
For one to secure an order, you must have a certificate that demonstrates that you employ locals and that you abide by preference practices.
That is hardly free trade.
Then we have some arguments that suggest that before we prefer local products, we must ensure our industry has been fully revived. This is a difficult argument to follow because it seeks to divert attention from the key issue by making reference to a situation Buy Zimbabwe is intent on correcting.
Clearly, if our industry was operating at full capacity and employment levels were high, the buy local campaign would not be needed. It is needed because our companies are closing and the few that are remaining are barely surviving.
So to say we must produce first is like putting the cart before the horse. Naturally, for something to be bought it has to be there and who in their right minds would say we are now at a situation where nothing is actually being produced?
Let us start with what is there and avoid cluttering arguments. The Confederation of Zimbabwe Industries (CZI) says we are now producing at below 50 percent capacity and going down. What we need is to support that production with our choices on what we buy.
We also need to ensure that based on the money being taken out we raise the levels of production. The real issue is that given the current priorities, the liquidity crunch and numerous trade barriers that have been put on a country that is using the United States dollar at the moment, we need to preserve all the money we have.
We cannot allow a situation that sees industry close, agriculture collapse, unemployment rise, Government fail to pay suppliers and yet our appetite for externalising money keeps growing. At some point, all things will grind to a halt.
Boldness on the part of Government to say no more imports is required. The Ministry of Agriculture, Mechanisation and Irrigation Development has done that in the poultry industry and the results have been very pleasing.
Were it not for that boldness, Irvine’s, Suncrest and multiple small-scale farmers would not be in existence. That is boldness in the face of real opposition. The challenge is for the rest of Government to follow suit.
We must save our dollars to prosper.
