Maravi

(SUNDAY MAIL ZW) Zim’s SA imports soar to US$1,2bn

Zim’s SA imports soar to US$1,2bn
Sunday, 14 October 2012 01:44

Investments from South Africa are consid­ered wel­come, but there are growing concerns that the country will continue to progressively lose the South African market, much to the detriment of local industries, as the South African government continues to roll out measures to ensure that 75 percent of procurement by their compa­nies is local.

Last year, on October 31, representatives of SA gov­ernment, business, labour and the community signed a Local Procurement Accord designed to provide bench­marks, timelines and commitments from all the signa­tory constituencies on how the plan will be executed.

It is believed that virtually all sectors of the economy will take a hit when Pretoria successfully rolls out its project as products that have been designated for the first phase of the procurement rollout include: buses, power pylons, railway rolling stock, pharmaceuticals, set-top boxes, clothing, textiles, leather footwear and food and canned products, including office furniture and school furniture.

Turnall and Caps Holdings have been two of the major casualties of South Africa policy pronounce­ments that have proven to be financially prejudicial for local firms.

In particular, Turnall was recently forced to commis­sion its new non-asbestos plant in order to try and reclaim its market after the ban of asbestos in its lucra­tive market seriously affected revenues also.

Pharmaceutical company Caps Holdings bat­tled unsuccessfully to lobby Pretoria to revise regula­tions that stipulated that drugs imported into the coun­try were supposed to be solely via air transport.

This negatively impacted on the landed price of the pharmaceutical giant’s products and made them uncompetitive.

What is particularly worrying policymakers is that Zimbabwe is seemingly developing into a fleamarket econ­omy at the expense of local industry, which is slowly collapsing.

Ironically, Zimbabwe is currently seeking a US$100 million loan facility from South Africa in order to prop up its economy.

An additional US$50 million loan is also being sourced from Angola.
Zimbabwe is presently battling a current account deficit and the trade deficit is forecast to reach US$2,8 billion by the end of the year, from total exports of US$5,1 billion against imports of US$8,2 billion.

The finance ministry noted in the Mid-term Fiscal Policy Review that the widening trade deficit is seri­ously affecting liquidity on the local market.

“The external position remains unsustainable with almost 10 days of import cover and a widening current account deficit now estimated at about 20 percent of GDP, which is also way off the Sadc recommended threshold of 9 percent of GDP.

“The mounting current account deficit is directly aggravating the liquidity crunch in the economy and if not arrested, will threaten the stability of the financial sector, as experienced in most developed economies.

“This current account deficit is largely financed through short-term capital inflows, accumulation of arrears and depletion of domestic assets, which under dollarisation are in foreign currency. This affects the liquidity position in the economy and, hence, has severe consequences on other sectors,” explained the finance ministry in the review.

posted by MrK @ 10:12 PM