First quarter trade worries CTPD


ZAMBIA recorded a trade deficit of about K310million in the first quarter 2015 the  Centre for Trade Policy and Development (CTPD) has revealed.

The Centres’ Executive Director Ms Isabel Mukelabai  who said the deficit was a matter of grave concern attributed the  situation to a growing  decline in export and increase in imports.

Ms. Mukelabai said “Looking at the March trade deficit of K310 million, we note that the deficit has increased by K202.7 million from February 2015, an increase that is almost double the February 2015 deficit which stood at K107.3 million. Key to this picture is the challenge the country experienced in the mining sector which could affected downwards production volumes of copper than initially projected,” She said her organisation had observed that imports continued to outstrip total exports during the first quarter of 2015, adding that this deficit should serve as a wakeup call for the Zambian Government on the need to accelerate diversification of the economy away from metal exports which comprise mainly copper accounting for 66 per cent in export earnings while non-traditional exports account for about 34 per cent.

Ms. Mukelabai said the high dependence on copper exports was not helping the country to enhance its macro-economic stability particularly on the global front when copper prices go down.

“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,” she said.

Ms. Mukelabai noted that the current trade deficit seen in February and March was in part attributable to the slowdown in production and operations of the mining industry in the last three months.

She said it was important for Government to take the development as a wake-up call and begin to look at the agenda of export and economic diversification seriously.

“It is our position that Government must begin to improve the current export situation in a much more sustainable manner by beginning to implement deliberate export diversification measures,” she said.

Ms. Mukelabai recommended 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 efforts around promoting value addition. Lowering manufacturing costs will make Zambian products more competitive,” Ms. Mukelebai said.

The CTPD said 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 expensive,” Ms. Mukelabai said.

“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 six times more valuable than formal maize exports of maize to Harare and three times more than informal exports to DRC. This will help increase foreign exchange earnings and contribute to stabilizing the kwacha depreciation as well in the short to long term.

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,” said Ms. Mukelebai.

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