Dollarisation Renders Local Goods Uncompetitive

THE dollarisation of products in Zimbabwe has rendered goods from the country uncompetitive on the export market.

Presenting their financial results for the year ending October 31 2008, Apex Corporation of Zimbabwe said while “dollarisation” was well received by most companies which had been affected by foreign currency shortages, the prices being charged were said to be way above those around the world.

“With the dollarisation of the economy in the last quarter, the cost of major raw materials like coke and cast iron became quoted in US dollars,” said Apex chairman Farai Rwodzi in a statement.

Apex is a broadly based grouping of primarily manufacturing industries in the region.

“These new prices pushed the cost of production to levels that rendered our products uncompetitive on the export market,” said Rwodzi.

During the period under review Apex achieved a turnover of $1,5 quintillion (old currency) and an operating profit of $24 quintillion.

Figures in local currency are unreliable as they do not present the true economic performance of a company because of rising inflation which is said to be well above one billion.

Apex has joined the bandwagon of other manufacturing and exporting companies which are lamenting the uncompetiveness of US dollars pegged goods in Zimbabwe when compared to the region.

Prices of goods and services in Zimbabwe are said to be about four times more expensive than those in the region and about five times those in Europe and America. Apex said the high levels of inflation had made financial reporting difficult in the country.

“The various price structures, the discrepancies in the exchange rate and the problem of compilling indices reflective of the general price levels have made it extremely difficult to report accurately as neither the US dollar conversions or the hyperinflation accounting can accurately capture financial performance,” said Rwodzi.

He said the revaluation of the currency was also making it difficult to compare performance in local currency adding that local orders had dried up.

“Demand for pots brakedrums, mining equipment, construction products has been non-existent on the local front. Given this scenario, the foundries will continue to focus on high value products and exports,” said Rwodzi.

Meanwhile the country’s export performance last year declined by 14,32% to US$1,3 trillion from US$1,6. According to the Reserve Bank the mining sector contributed 51% of the total exports followed by tobacco which accounted for 16%.

“For the period January 1 to December 31, total exports under Agriculture amounted to US$464 million from US$541 million representing a decline of  14,14%,” the Reserve Bank said.

Tobacco exports amounting to US$203 million were processed during the same period, a 24,3% decrease from US$247 million the previous year.

“Total shipments for the manufacturing sector from January 1 to December 31 amounted to US$220 million compared to US$250 million reflecting a 12,02% decrease,” the Reserve Bank said.

Mineral shipments during the period under review amounted to US$676 million compared to US$801 million.
Tourism’s total receipts stood at US$29,1 million representing a 55% decline in 2007.