The Centre for Trade Policy and Development has noted with great concern Zambia’s trade performance in the first quarter of 2015.
Trade deficit for March stood at K310 million, meaning the deficit has increased by ZMW 202.7 million from February 2015, an increase that is almost double the February 2015 deficit which stood at ZMW 107.3 million.
Centre for Trade Policy and Development Executive Director Isabel Mukelabai said key to this picture are the challenges that the country experienced in the mining sector which could affected downwards production volumes of copper than initially projected.
In a statement, Mrs Mukelabai observed that imports continued to outstrip total exports during the first quarter of 2015 and this should serve as a wakeup call for the Zambian Government on the need to accelerate diversification of the economy away from trade in metal exports which comprise mainly copper accounting for 66 per cent in export earnings while non-traditional exports account for about 34 per cent.
‘It is our opinion that the current high dependence on copper exports makes the country vulnerable in terms of its macro- economic stability particularly when on the global front, copper prices go down but also on the domestic front when the sector experiences serious governance and management challenges leading to inconsistencies in policy implementation which ultimately affect the production volumes of copper and the metals in the sector as has been seen in the recent past,’ Mrs Mukelabai said.
She said the current trade deficit seen in February and March is in part attributable to the slow -down in production and operations of the mining industry in the last three months.
‘Government should take this as a wake-up call and begin to look at the agenda of export diversification and economic diversification very seriously,’ Mrs Mukelabai said.
Mrs Mukelabai said Government must begin to improve the current export situation in a much more sustainable manner by beginning to implement deliberate export diversification measures.
‘CTPD therefore recommends that Government should take measures to promote consumption of local products rather than imported” goods. Doing this requires Government to take measures that will facilitate lowering the cost of manufacturing locally as well as intensify on efforts around promoting value addition. Lowering manufacturing costs will make Zambian products more competitive,’ Mrs Mukelabai stated.
She added, ‘CTPD is also of the considered opinion that Zambia must seize its unique advantage of increasing its Maize export volumes to maize deficit countries and regions within Africa such as the Congo DR and Kenya as a way of improving exports in Agriculture away from the Mining sector. It is disappointing to note that despite urgent calls to action to make Zambia more competitive for chronic maize deficit markets, Government through the FRA still continues to purchase maize at close to import parity levels rather than export parity, making the Zambian maize very uncompetitive on the export market.’
Mrs Mukelabai said evidence also suggests that rather than export Maize in its raw form, Zambia would earn more foreign exchange if it actually exported vale added maize products rather than just raw maize.
‘There is need for the government to undertake a detailed assessment of the maize export value chain to determine where the most value could be added. Our analysis shows that a tonne of maize can produce 550 kg of breakfast mealie meal, 330 kg of roller meal and 100 kg of maize bran, When valued at export parity less costs of production, mealie exports to DRC for example are 6 times more valuable than formal maize exports of maize to Harare and 3 times more than informal exports to DRC.’
She added, ‘This will help increase foreign exchange earnings and contribute to stabilizing the kwacha depreciation as well in the short to long term.’
Mrs. Mukelabai said CTPD encourages government to look at other options of diversifying exports and value addition away from the mining sector. We are of the opinion that Government must do the noble thing and begin to act in this regard.
‘CTPD therefore encourages government to look at other options of diversifying exports and value addition away from the mining sector. We are of the opinion that Government must do the noble thing and begin to act in this regard.’