Harare - Zimbabwe’s exports market trade has remained Afro centred between January to August 2020 and January to August 2021, with only two global states featuring in both 2020 and 2021 top five (5) export destinations.
Latest data from ZIMSTAT for the eight months to August 2021 shows that only United Arab Emirates (UAE) and Belgium made it to the top five (5) list. South Africa dominated the top five list with exports increasing to US$1.6 billion from US$ 928 million in the same 2020 COVID-19 bound year with a monthly average of US$195 million.
Following was United Arab Emirates at US$958.6 million while Mozambique, Belgium and Zambia export receipts were at US$334 million, US$58 million and US$37 million in their respective orders.
Adding to the 2021 top 10 list is China, Botswana, Tanzania, USA and Malawi.
However, regional trade is not that bad for a nation. It unlocks a lot of opportunities for the country.
Strengths of African dominated export trade
Regional trade is cheaper than international trade. Transporting products to the South African market is cheaper than exporting to Indian markets. This is the first advantage gained by Zimbabwe’s Afro dominated export markets. It strains less on export taxes.
Besides that, regions have regional blocs which are co-operative unions of countries within a specific geographical boundary for example, SADC. These corporative blocs offer plenty of merits to a country as they are a special type of economic integration.
In Regional Trading Blocs, tariffs on selected goods and services are either reduced, eliminated on all trading goods coming from the participating members and sometimes no tariff barriers between members are there.
These facilitates foreign direct investments (FDI) which benefits the economies of participating members. FDIs eases the doing of international trade. Countries usually have their own import tariffs, which makes trading rather difficult. A lot of economic sectors usually require presence in the international markets to ensure sales and goals are met. FDI makes all of these international trade aspects a lot easier. For example, the top 5 of the Zimbabwe’s exporting markets include Zambia, Mozambique and South Arica which are within the SADC trading bloc.
Besides that, FDI is good for employment and economic boosting. It creates new jobs and more opportunities as investors build new companies in foreign countries. For example, Simbisa Brands have footprints in Kenya, Botswana and Zambia. This leads to an increase in income and more purchasing power to locals, which resultantly leads to an overall boost in targeted economies.
Blocs also enables economies of scale and cut costs. As tariffs are removed, the cost of imports goes down. Demand changes and consumers become the king. Costs effect on tariffs makes South Africa remains both the dominant importing and export destination for Zimbabwe.
A devaluation of a currency makes the importation of raw materials expensive thereby raising production costs for local producers. Consequently, producers increase the prices of their products in a bid realise profits, making local products more expensive. This reduce competition for the local products in both local and export markets.