1. Enhancing Exports in the New Dispensation – The critical role of MSMEs
TRADE AND INVESTMENT AND UNPACKING CONSUMER PROTECTION BUSINESS SEMINAR
Enhancing Exports in the New Dispensation – The critical role of MSMEs
Mike Nyamazana
Africa Corporate Advisors (Private) Limited
31 May 2018

2. Presentation Road Map The Export challenge The possible causes
The areas of opportunity – SMEs
Necessary conditions for export enhancement
Recap and conclusion

3. The Export challenge

5. The export challenge…(contd.)
Exports are marginally improving
At $3.48 billion, they are still below the 2013 peak position of $3.88 billion
Imports are declining – but this is not good news
Declining mainly because of SI 64 and the lack of foreign currency which affects imports of raw materials.

7. The export challenge The 2018 picture is also not too different
The trade deficit for the first 4 months is not reducing significantly.
Exports appear stagnant- If we annualise the figures for the first three or four months we may at best match the 2017 figures.

8. The export challenge … (contd)
Exports have been declining over the last 5 years
Huge budget deficits as a result
SI 64 only choked off demand for imports, but had little impact on exports
Despite SI 64, foreign currency shortages continue
We need new policies and practices to boost exports

9. Modest export growth - the possible causes
Dollarisation – too strong a currency; leading to lack of competitiveness.
Fall in productivity – there is very little to export
Slow pace of formalisation of the MSME sector
Focus on import controls rather than export incentivisation and facilitation

10. SMES – the real opportunity (why)
Sheer numbers – they have had an impact on employment locally (both formal and informal)
They are closer to the new economy (smaller production facilities, modern equipment, etc. i.e. lower switching costs.
ICT driven – linked to modern world
Empirical evidence shows that if they are well supported they can contribute to the export drive

11. The necessary, practical conditions
These are at three levels
Policy level
Industry level
Financial sector level

12. Necessary interventions – Policy level
We have seen interventions by the authorities in respect of:
Ease of Doing Business (EODB) reforms
However, more needs to be done. The agreed reforms have taken too long to take effect.
The various legislative changes naturally take long to effect.
But many of the measures to improve the cost of doing business (CODB) do not require legislative changes.

13. Policy level interventions (contd).
Free export documentation – relaxed but still something is paid.
RBZ export incentive packages:
have been introduced but uptake is still low partly because the amount is in local currency.
Companies require foreign currency for imports of raw materials.
Post election economic policy – to focus on programme of return to local currency and give premium on foreign currency.

14. Policy level interventions (contd).
Post election economic policy
to focus on programme of return to local currency
This will give premium on foreign currency and incentivise exporters in the strongest terms
Will also choke off demand for unnecessary imports.
Biggest impact will be on restoration of competitiveness

15. Industry level interventions
Business linkages:
Big business and MSMEs – to facilitate indirect exports
Lines of credit with international funders – MSMEs have access to international support i.e. capacity building and revolving funds

16. Financial sector interventions
Banking sector:
Lines of credit for exports.
The recent Standard Chartered facility is an example
But more needs to be done
The export sector is the one major area of growth with a lot of potential in the new dispensation

17. Financial sector interventions (contd)
Foreign currency accounts (FCAs)
an official return of the FCAs will create a real incentive for exports.
This incentive was lost with the dollarisation or multicurrency regime
This should benefit all exporters who will be able to import raw materials
Admittedly the Z$B (bond note) incentive payments assist in CODB but are outweighed by the cost of getting foreign currency

18. Recap and Conclusion
The recommendation for enhancing exports thus lie in:
An active programme for the formalisation of the MSME sector
The introduction of a local currency
The introduction of FCA retentions
The focus on removing unnecessary costs by introducing free export documentation

19. THANK YOU

20. Contact details – Mike Nyamazana
Address: 15 Downie Avenue Belgravia, Harare; P O Box HG853, Highlands, Harare, Zimbabwe
Switchboard ; Direct Line  ; Cell/mobile: 
Website:
  Skype: nyamazana.mike
Africa Corporate Advisors (Private) Limited