Forex crunch scuppers Zim export growth drive

NDAMU SANDU in CAIRO, EGYPT

Investment-starved Zimbabwe’s push to lure investors suffered a major blow after it pulled out of hosting a country day at the inaugural Intra-African Trade Fair (IATF) in Cairo, Egypt due to financial constraints.

Zimbabwe is currently experiencing an unsustainable trade deficit that has resulted in the drying up of the United States dollar on the domestic economic. The southern African nation abandoned its own currency in 2009 for a basket of foreign currencies mainly dominated by the dollar.

Following the resignation of longtime leader last year in November, his successor President Emmerson Mnangagwa has committed to a raft of economic and political reforms to attract foreign direct investments for the country as well as establish new export markets.

This week, Zimbabwe blew a chance to interface with trade partners after it failed to raise the required funds to exhibit.

It cost a meagre $400 000 to host the country day and Zimbabwe, which had been scheduled to hold the event yesterday, pulled out at the last minute after it failed to raise the fee.

IATF runs from December 10 to 17.

An executive with Afreximbank told Business Times they expected Zimbabwe to host a country day which would strengthen the “Zimbabwe is open for business” narrative.

“It came as a shock to us that Zimbabwe was pulling out from hosting the country day,” he said.

Since taking over the reins, President Mnangagwa has been on a drive to lure foreign investors.

This has seen Government amending the indigenisation legislation where prescribe the 51:49 percent threshold only to diamond and platinum as the administration sought to break away from the old order which was blamed for scaring away foreign investors.

Zimbabwe was billed to host the Country Day on Wednesday where it was supposed to showcase its investment potential to the world.

Zimbabwe is grappling with a debilitating foreign currency shortage which analysts say will scupper the growth of the economy. The economy is importing more than it is exporting.

In the first half of the year, Zimbabwe realised $2,47 billion from exports, up 36,5 percent from the $1,81 billion realised in the same period last year. Imports amounted to $3,36 billion, a 27,5 percent increase from $2,63 billion realised in the comparative period last year.

The forex crunch, sources told Business Times, could have made Zimbabwe irresponsible for shelling out $400 000 for an event at a time hospitals have run out of drugs as there is no foreign currency for imports.

Other intimated that Zimbabwe could still have hosted the event if it had brought in the private sector on time.

IATF is meant to drive intra-African trade which is at 15 percent compared to Europe (59 percent), Asia (51 percent) and North America at 37 percent.

The African Export-Import Bank Afreximbank attributes the low intra-African trade to lack of access to trade and market information.

IATF comes on the back of the African Continental Free Trade Area signed by 48 countries in March to promote trade among Africans and create one of the biggest single markets in the world.

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