Export Receipts Down 8% in Q1

A DRASTIC decline in mining exports and delays in opening the tobacco auction floors saw the country’s foreign currency-starved economy recording an 8% decline in net export receipts for the first quarter of this year compared to last year.

This decline in export trade comes at a time when the country is facing a severe economic crisis on the back of reduced productivity levels in industry and a weakening local currency.

The Reserve Bank governor, Gideon Gono, in his first quarter Monetary Policy Statement (MPS) on Wednesday, said export proceeds recorded from the first quarter this year were US$250 271 354 compared to US$273 307 948 recorded during the same period last year.

An increase in inflows from the diaspora pushed foreign currency receipts from Money Transfer Agencies (MTAs) to US$22 210 118 from about US$3 102 994 recorded in the same period in 2007.

This increase represented a 616% change.

Income receipts dropped to US$2 620 461 this year down from US$7 830 282 earned last year.

Capital investments, however improved significantly to over a US$1,8 million from about US$4 500 recorded last year.

This means that people continue to send money to their relatives in Zimbabwe.

Loan proceeds also declined by 63% as the country’s isolation from the financial world continue.

For the period under review Zimbabwe only managed to get US$13 625 424 in foreign loans  compared to US$36 779 223 achieved during the same period last year.

Free funds increased by 15% to achieve US$113 701 452 from US$98 445 116 recorded during the first quarter of last year.

Gono said there was also a decline in total monthly export shipments in the period under review.

Although the mining sector continued to top the export contributors this year dropped to about US$182 million in the period from January to March compared to US$850 recorded last year.

The total foreign currency receipts from the gold sector slumped by 49%. The main reason for this downturn was the decline in gold production.

Most mines have been struggling to remain viable because of foreign currency shortages and power outages.

A low support price and delays by the central bank in paying for gold deliveries also affected the production.

Zimbabwe is now expected to produce 3,6 tonnes of gold this year down from 6,7 tonnes recorded last year.

At its peak Zimbabwe produced 27 tonnes in 2000.

University professor Anthony Hawkins said the decline in exports was a reflection of an ailing economy.

“This is just part of a collapsing economy characterised by a completely screwed up and distorted policy framework,” Hawkins said.

He said the “overvalued” local currency on the official market, frequent power cuts and erratic supplies had led to the decline in exports.

He said that only a change in government could transform the pattern of this country.

“This trend can only change when there is a change in government,” he said.

Gono’s monetary policy came as tobacco farmers continued to withhold their crop from the auction floors as they protest depressed prices.

Tobacco was once among the country’s top foreign currency earners before the sector was destroyed by government’s land reform.

Despite slow trading at the auction floors, the central bank is expecting deliveries at the floors to surge.
“Owing to the support the sector has received from the Reserve Bank, production in the 2007/2008 season is expected to surpass the 63 million kgs realized in 2007,” Gono said. 

Agriculture, the erstwhile mainstay of Zimbabwe’s agro-based economy, failed to generate sufficient foreign currency that could match last year’s earnings.

Despite being dubbed the “Mother of all agricultural seasons”, earnings in the first quarter of the 2007/2008 season significantly dropped to US$38 million against US$224 million in 2007.

Although manufacturers are now exporting in order to keep afloat against a backdrop of government -imposed price controls, the sector continues to reel from suppressed capacity utilisation reported to be around 10%.

Export earnings from the sector took a nosedive recoding almost a quarter of the US$283 million recorded in 2007.

“The exporting sector is being affected by foreign currency shortages for procure raw materials, low capacity utitlisation, hyperinflation and massive skilled labour flight,” Economic analyst Luxon Zembe said.

Zembe also blamed the Reserve Bank for expansionary policies, which he said were counterproductive to business growth.

He said there was need for a major foreign currency injection of $5 billion to kickstart the economy.

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