daniel chigunwe
Business Reporter
ZIMBABWE should take proactive measures to expand the country’s export basket, currently dominated by minerals, to avoid shocks from unforeseen global commodity price fluctuations.
While the marked increase in mineral exports has earned Zimbabwe significant amounts of foreign currency, there are concerns that the current situation creates the risk of potential external shocks during global mineral price fluctuations.
Historically, Zimbabwe’s export basket comprised goods such as textiles, clothing, processed foods and beverages, chemicals, and leather and hides.
The diversity in the export basket acted as a buffer against potential risks from global commodity price fluctuations and guaranteed stability of the domestic economy.
But mineral and alloy exports now dominate Zimbabwe’s outbound shipments, accounting for nearly 76 percent of annual exports, while 16,5 percent of that is unmanufactured tobacco.
The dependence on primary products raises concerns about long-term stability of both trade and overall economic growth.
According to ZimTrade, the high dependence on a few export products puts the country at risk, given that any commodity price fluctuations would have a negative impact on the economy.
A survey by the Zimbabwe Economic Policy Analysis and Research Institute, in collaboration with the Ministry of Finance, Economic Development and Investment Promotion, and the Reserve Bank of Zimbabwe, shows that products from Zimbabwe with export comparative advantage have significantly diminished, from 488 in 2002 to just 160.
In November 2024, Zimbabwe’s exports increased by 29,7 percent to US$905,2 million compared to October 2024, when exports amounted to US$698,1 million.
Among the top 10 products exported by Zimbabwe in November 2024 were semi-manufactured gold; tobacco, partly or wholly stemmed/stripped; nickel mattes; nickel ores and concentrates; ferrochromium; chromium ores and concentrates; other mineral substances; coke and semi-coke of coal; platinum unwrought or in powder form; and industrial diamonds unworked.
While minerals significantly contribute to the country’s economy, analysts and industry players have called for diversification to reduce dependence on a single sector.
For instance, despite firm gold prices, most of the minerals exported by Zimbabwe had a mixed performance in 2024 following a decline in prices due to increased supply and ample inventories.
Lithium spot prices plummeted by 75 percent, while cobalt, nickel and graphite prices dropped by 30 percent-45 percent.
Platinum prices also trended down despite a seeming supply deficit and high demand.
Experts say there are numerous opportunities for Zimbabwe to broaden its export basket.
One of the most promising sectors is horticulture, which holds vast potential from high-value products such as citrus fruits, avocados, blueberries and macadamia nuts, which have burgeoning Asian markets, including China and Indonesia.
Zimbabwe also has a comparative advantage in various other sectors and products, including wood and furniture, leather goods, processed foods, tobacco processing, cotton and its processing.
According to ZimTrade, export diversification in the direction of more sophisticated products would insulate Zimbabwe from global shocks and accelerate economic growth and development.
“By diversifying the export portfolios, the country can potentially access a more stable revenue stream compared to concentrating on just a few products and markets.
“More diversified exports generally experience faster economic growth; therefore, variation in export diversification levels explains the observed growth differences across Africa,” ZimTrade said in one of its monthly trade bulletins last year.
“Countries that are commodity-dependent or have a narrow export basket usually face export instability, which arises from inelastic and unstable global demand.
‘‘As such, export diversification is one means to alleviate these challenges,” ZimTrade said.
Economist Mr Eddie Cross cautioned against overdependence on certain commodities, emphasising the risky nature of such reliance for Zimbabwe’s economic well-being.
“I think the overdependence on the minerals and metals sector or the mining industry is actually not in our long-term interest.
“We need a diversified economy with a diversified export programme. Our manufacturing sector is not a significant exporter at all, whereas it used to be.
“ . . . and today we are probably 80 percent mining and 20 percent the rest; this is not good because we know that the mining industry is subject to fluctuations and it is cyclical.
“The mining market is circular, and, of course, if you are overly dependent on mining, that can severely impact your economy,” said Mr Cross.
He cited Zambia as another country heavily dependent on a single commodity, saying roughly 70 percent of exports derive from copper.
Any decline in copper prices weighs heavily on the economy, he added.
Economist Mr John Chisumo believes the country has the potential to achieve even greater success if a strategic approach is implemented to improve the quality and diversity of its export offerings.
“Mechanisms should be crafted to digress from the current state of our exports,
which are overwhelmingly dominated by minerals.
“Let us flip that and let maybe manufactured products dominate our export mix. If we are to continue with minerals being the major exports, let them be value added at least,” Mr Chisumo said.
ZimTrade is, however, working tirelessly to promote the growth of Zimbabwe’s outbound trade, in line with the Government’s target of 10 percent growth annually. This would see exports surge to US$14 billion by 2030, aligning with the Government’s broader objective of achieving an upper middle-income economy by that time.
