ZIMBABWE should focus on diversifying its export basket for it to lower the widening trade deficit, the African Development Bank has said. The country presently imports about US$7 billion worth of goods, mainly from South Africa, and exports about US$3 billion worth of goods.
In its monthly economic review for January 2013, the AfDB said the country's export basket continued to be dominated by raw products.
For example, the bank said that during the period January to October 2012, mineral exports accounted for 64 percent of all exports followed by tobacco at 19,4 percent.
"Thus, about 83 percent of exports are raw materials, emphasising the need to broaden the export base to also include semi-processed commodities," said the bank.
"Low exports are a reflection of the local industry's low production capacity and the absence of diversification and value addition."
The AfDB said Zimbabwe should strive to recapture regional markets by increasing and creating new export products.
It also encouraged Zimbabwe to ensure beneficiation of products, particularly minerals, before export to increase their value.
"In this regard, horticultural exports and agro-processing industries need to be revamped, and there should be beneficiation of minerals to increase the value of mineral exports.
"The current scenario which encompasses over-reliance on primary commodities, whose prices are influenced by international developments, leaves little room to influence the pattern of exports.
"Beneficiation of primary commodities would go a long way in increasing the value of exports," said the AfDB.
Industrial capacity utilisation in Zimbabwe is currently below 50 percent mainly due to lack of affordable capital. At least US$2 billion is required to finance industrial recovery in the country.