On account of the improved remittances inflows, Zimbabwe
managed to record a current account surplus.
The current account records the value of exports and
imports of both goods and services and international transfers of capital.
Zimbabwe’s Diaspora remittances defied projected a slowdown in inflows due to
the pandemic to hit record levels of about US$1 billion.
The World Bank, in its latest Zimbabwe Economic Update,
said remittances contributed to the country’s resilience to the regional and
global trade shocks.
“Despite trade disruptions and the sharp decline in global
economic activity caused by the pandemic, Zimbabwe’s current account remained
in surplus at 5,3 percent in 2020.
“A key driver of the surplus was remittances in 2020, which
saw a growth of 58 percent. The increase in formal remittances may reflect the
shift to greater use of official channels for remittance delivery due to the
pandemic,” said the World Bank.
Although the pandemic-driven trade disruptions did have a
negative impact on Zimbabwe’s foreign currency generation, a positive was that
the country’s imports were significantly reduced.
Authorities have, for years, been fighting importation of
‘non-essential’ goods.
“Adjustment of trade started in April 2020, when the
Government and neighbouring countries initiated pandemic containment measures
affecting domestic and cross-border movement of goods and people.
“Trade disruptions were more pronounced on imports than on
exports, but imports rebounded more quickly, growing by 4 percent in nominal
terms on the account of higher demand for maize and other grains, fertiliser,
and electricity – as a result of the persistent drought,” said the Bretton
Woods institution.
“Fuel imports, however, dropped by 51,1 percent
year-on-year in response to successive lockdowns, weakening economic activity
and loss of disposable incomes. Exports grew by 2,7 percent, driven by
platinum, nickel, and diamond with traditional key export commodities like
tobacco, gold and chromium declining in 2020.
“Despite a sharp increase in global gold prices and gold
incentives provided by RBZ, gold exports declined by 7,8 percent, partly
reflecting an increased level of smuggling of gold from Zimbabwe.
“Travel and border restrictions and fear of contagion also
led to sharply reduced international travel and transport receipts, which are
important sources of foreign exchange.”
Meanwhile, with Zimbabwe (and most countries) still dealing
with the “third wave” of the health pandemic, the threats to the performance of
the current account are still potent.
And indications are that they may have been worsened by the
recent violent protests in South Africa, which is Zimbabwe’s biggest trading
partner and a vital part of trade routes into the region and into international
markets. “The economic impact is, firstly, two-fold. We are focused on the
imports, but we need to focus on what we export through South Africa. What we
are unable to move out of Zimbabwe for earning income is significant.
“There is a third dimension, which is what is being
illicitly transacted during this time of chaos and what opportunities are being
created for criminal networks and bypassing the accountability of the State for
both South Africa and Sadc,” said international constitutional lawyer Brian
Kagoro recently.
“I think the biggest impact on Sadc will also be the fourth
dimension, which is Diaspora remittances. When you say the factories, the
warehouses and health facilities are being burnt down, we are talking about
South African jobs, but we are also talking about jobs for Sadc folks.
Reconstruction will take time; it means those people who were employed in those
sectors have lost sources of income.” Herald
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