• Record Trade Deficit: Reached an all-time worst of US$217.7 million in February 2025
• Decline in Exports: Plummeted by 21.4% from $652 million to $512.6 million in February
• Surge in Imports: Continued to rise, with a 2.5% decrease being insufficient to offset the growing trade deficit.

Harare- Zimbabwe’s trade deficit reached a significant US$217.7 million in February 2025, a 124.2% increase from the US$97.1 million deficit recorded in January, reflecting a deepening economic crisis driven by declining export earnings and a persistent rise in imports.

Total exports plummeted by 21.4% from US$652 million in January to US$512.6 million in February, largely due to significant drops in key commodities such as gold, tobacco, diamonds, and ferro alloys.

Meanwhile, imports slightly declined by 2.5% from US$749.2 million to US$730.3 million, yet the composition of imports shifted toward higher spending on petroleum oils, motor vehicles, machinery, and wheat, exacerbating the deficit.

This imbalance reflects continued structural weaknesses in Zimbabwe’s economy, including over-reliance on a narrow export base, inefficiencies in production, and external pressures, all of which demand urgent policy interventions.

Gold, despite contributing a record 42.3% to total exports, saw earnings fall from US$291 million in January to US$216 million in February, even amid soaring global gold prices. This paradox suggests significant leakages, likely through smuggling or under-reporting, which have long plagued Zimbabwe’s gold sector.

Tobacco, a historic cash crop accounting for 15.8% of exports, dropped from US$120 million to US$83 million, reflecting reduced production possibly tied to unfavourable weather, limited farmer support. Ferro alloys, critical to the steel industry, declined from US$22 million to US$14 million, and diamonds fell from US$15 million to US$10 million, both impacted by power outages disrupting mining operations and a lack of investment in beneficiation.

These declines collectively highlight how Zimbabwe’s export sector is vulnerable to both domestic inefficiencies and external market dynamics.

Conversely, the rise in imports reveals a growing dependence on foreign goods to meet domestic needs, further straining the balance of payments.

Petroleum oils, the largest import category at 20.5%, rose from US$117.8 million to US$129.9 million, driven by Zimbabwe’s lack of domestic refining capacity and rising fuel demand.

Motor vehicles for goods transport increased from US$17 million to US$21 million, and machinery for industrial purposes jumped from US$9 million to US$15 million, signaling efforts to bolster infrastructure and mining capacity, yet these are costly imports that do not immediately translate to export gains.

Wheat and meslin imports more than doubled from US$5 million to US$12 million, reflecting food security challenges amid declining local agricultural output and recurring drought spells amid lack f sufficient irrigation system.

While cereal imports overall fell from US$74 million to US$51 million, the uptick in specific grains shows Zimbabwe’s struggle to achieve self-sufficiency, compounded by drought and inadequate farming support systems.

Several factors explain these troubling trends. The drop in gold earnings despite high prices points to systemic leakages, with estimates suggesting up to 20% of production is lost to informal channels. Tobacco’s decline may also stem from the yoke of private contract farming, where farmers are locked into exploitative agreements that limit reinvestment in productivity.

Ferro alloys and diamonds suffer from chronic power outages, with Zimbabwe’s unreliable electricity supply hampering mining and processing. On the import side, the surge in petroleum and machinery reflects a lack of domestic alternatives, while wheat imports highlight agricultural vulnerabilities exacerbated by climate change and policy neglect. These dynamics have widened the trade gap, eroded foreign exchange reserves, and deepened Zimbabwe’s economic woes.

To address this crisis, the government must adopt bold reforms. First, reducing export retentions from 30% to at least 10% would incentivise exporters by allowing them to retain more foreign currency, boosting liquidity and encouraging production.

Currently, the high retention rate stifles reinvestment, particularly for miners and manufacturers. Already, CAFCA, Ariston among other key industries have flagged the likelihood of increasing local sales at the expense of exprts due to this policy which erodes thin margins they will be competing for.

 Tackling power outages is critical. Investing in renewable energy like solar or expediting repairs to aging infrastructure could stabilise mining and manufacturing output and curbing gold leakages requires stricter oversight, such as digital tracking systems for production and sales, alongside incentives for small-scale miners to wholly formalise operations.

Empowering farmers by shifting away from private contract farming toward state-supported cooperatives or subsidies would enhance tobacco and food crop yields, reducing import reliance.

Finally, Zimbabwe should pivot toward a creation economy, focusing on value addition like processing tobacco into cigarettes, refining gold, or manufacturing ferro alloy products domestically to diversify exports and capture higher global market value.

Therefore,  Zimbabwe’s record trade deficit in February 2025 reflects a confluence of declining export performance and rising import dependence, rooted in structural inefficiencies and policy missteps. The significant drops in gold, tobacco, diamonds, and ferro alloys signal urgent needs for better resource management and infrastructure, while the import surge underscores a failure to bolster local production.

By lowering export retentions, addressing power and leakage issues, empowering farmers, and embracing a creation economy, Zimbabwe can begin to narrow its trade gap.

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