THE Reserve Bank of Zimbabwe (RBZ) says the country’s total imports, which stood at US$2 128 million in 1995, declined marginally, to an estimated US$1 848 million last year
The bank says notwithstanding the poor performance in Zimbabwe’s balance of payments, merchandise imports remained high, resulting in severe shortages of foreign exchange.
In its Weekly Economic Highlights for the period ending August 29, the RBZ said increased demand for foreign exchange to procure food, fuel, electricity, drugs and other imported raw materials and industrial inputs, had occurred against the backdrop of shrinkage in traditional sources of foreign exchange, most notably exports, foreign donors and external lines of credit.
Reflecting high coefficients of imported inputs in Zimbabwe’s manufacturing industries, imports of intermediate goods have remained high, averaging US$500 million over the last 10 years.
The share of imported inputs in total industrial inputs, or imported input coefficient, is estimated to be around 40%, across most of the country’s manufacturing industries.
“Intermediate goods im-ports include industrial chemicals, explosives, crude materials, oils and fats, which are critical raw materials in the country’s industries,” the RBZ said.
“These, together with imports of capital goods – mainly machinery and industrial equipment – are essential for domestic production, particularly in agriculture, manufacturing, mining and construction. Reflecting drying up of long-term external lines of credit, imports of capital goods have, however, fallen, from above US$1 billion in 1997 to around US$500 million in the last two years.”
The RBZ said imports of consumption and other non-essential goods had, however, risen significantly representing a further strain on dwindling sources of foreign exchange.
It said imports of consumption and manufactured goods included tinned food and beverages, bottled mineral water, electrical, jewelry and luxury passenger motor vehicles.
“Cutting back on these imports, most of which have local substitutes, saves significant amounts of foreign exchange, as well as promoting local industries,” the RBZ said in its report.
“While imports of fuel, electricity, drugs, intermediate and capital goods are critical for domestic production and well-being of the nation, the country can, however, save on the importation of consumption goods exist, it is prudent for the country to cut back on these imports, so as to free foreign exchange resources for critical imports and other essential products not available locally.”
The central bank said imports of consumption goods and other non-essentials should be curtailed, so that the country made productive use of all the foreign exchange earned.
It said in the medium to long-term, however, there was need for Zimbabwe to reduce the current high imported input coefficients in local industry, through systematic import substitution industrialisation strategies.
“This requires that the culture of value addition and product bene-ficiation be firmly entrenched in the country’s industries, so as to gradually reduce import depende-nce and, ultimately attain self-sufficiency,” the RBZ said.
“Industry should, therefore, take advantage of abundant natural resources in the country, to substitute imported inputs for locally-produced raw materials and intermediate industrial inputs.”