Due to the backward infrastructure in Zimbabwe and insufficient water and power supply with higher prices, Zimbabwean enterprises have to use diesel engines for electricity supply for plants, which leads to their production cost constantly high.
Though stepping over the seas and oceans to Zimbabwe, added with transport charges and tariffs, foreign imported goods still have lower prices compared to similar domestic goods in Zimbabwe, which results in a steadily failure of its domestic commodities in competition with continuous high trade deficit in this country.
Cifnews.com learnt from "allafrica", an African media, in its recent report that the trade deficit Zimbabwe was constantly high. In the first half of this year, the amount of goods imports in Zimbabwe reached $2.9 billion while that of goods exports was only $1.2 billion. Munyaradzi Hwengwere, the general manager of IBuy in Zimbabwe, showed that Zimbabwe should act to reduce trade deficit as much as possible. "The trade deficit in Zimbabwe is in a tremendous figure mainly due to the lack of competitiveness of domestic goods in international market. Additionally, in domestic markets, the prices of domestic goods are even higher than imported goods. "
In order to protect domestic industries, Zimbabwe should immediately stop the dumping of low-price goods and low-quality goods into the country. Furthermore, Zimbabwe should utilize the capacity of enterprises to the largest extent to improve the situation where enterprises have difficulties for financing. Currently, most companies in Zimbabwe have not fully started working with only 30% in their production capacity.
The main imports of Zimbabwe are consumable products like grocery food, garments, automobiles, car accessories, which accounts for 70% of the total amount of imports.
According to a study on the capacity of export manufactures of Zimbabwe in 2013, due to difficulties in production and low production capacity, there have been 70% domestic enterprises that had exported goods halted production during the past decade.
Cifnews.com learnt that many plants in Zimbabwe have not fully started their production, which leads to heavy waste of production capacity, where the rate of capacity utilization was only around 20% in industries like paper making, printing, fashion, and textile. Lower rate of capacity utilization results in higher unit production cost, which leads local products in Zimbabwe unable to compete with products from surrounding districts and countries.
In addition, infrastructures like electricity, water, and transportation in Zimbabwe was poor. Insufficient power supply always give out blackouts or limited power for plants, which have to generate power by diesel engine; meanwhile, water resource in Zimbabwe is in shortage with water charges remaining constantly high; inadequacy investment in highway and railway as well as high freight, etc. These elements all result in higher production cost in Zimbabwe than other countries, thus the prices of domestic products are higher than imported products.