HARARE - President Robert Mugabe’s government must take a leaf from Japan, which returned to a trade surplus for the first time in six years in 2016, helped by cheaper oil imports and an improvement in exports toward the end of the year.
The Asian nation’s trade balance improved drastically from a deficit of ¥2,79 trillion in 2015 to ¥4,07 trillion ($35,76 billion) by end of last year.
This compares unfavourably with Zimbabwe whose trade deficit with the rest of the world stood at $2,3 billion in 2016 despite the country having implemented the controversial imports ban in July.
In an effort to grow its economy like Japan, one of the wealthiest countries on earth, Zimbabwe must stop being reactionary and have a strong trade policy premiered on significant investments in the agriculture sector and support the expansion of international trade, especially exports of manufacturing goods.
The secret of Japan’s success — a country that was reduced to ashes during the World War II — lies in very effective economic and trade policies backed by a powerful and impartial civil service, which designed and enforced economic and trade policies which made Japan an economic superpower quickly.
The Asian island is very small and very poor in natural resources. So, ultimately Japan is forced to import a large amount of food, energy, and raw materials to support its population, and in order to earn foreign exchange to pay for the imports, Japan has to export a large amount of goods, mostly manufactured goods.
This pattern of the Japanese trade is often called “processing trade”, because it produces goods by processing imported raw materials. Therefore, the government put great emphasis on expansion of exports.
Due to these aggressive trade policies Japan has, over the years, emerged as one of the largest exporting countries which accumulate huge trade surplus.
Taking a leaf in breaking the decades-long trade deficit cycle, the Zanu PF-led government must start putting in place mechanisms to capacitate local firms through tax breaks and an improved business environment so as to boost our exporting capacity.
As things stand, with the Zimbabwean economy on the verge of collapse, companies are finding it difficult to compete domestically with smuggled and cheap imported products — let alone export — due to high production costs and an unforgiving economic environment.
As such, it is critical for the country’s leadership to review its modus operandi — that has not worked in the past 37 years — and start studying and copying economic recipes that work from successful nations.
It cannot be business as usual when all the country’s economic indicators are heading south.