Trouble is brewing with regards to imports and exports. This, as the Mediterranean Shipping Company SA (Zimbabwe) Limited (MSC) has threatened to halt shipment of Zimbabwean bound containers over unpaid funds. Not only will they stop shipping to Zimbabwe but they will also discourage the acceptance of any cargo destined for Zimbabwe.
In a letter addressed to the President of the Confederation of Zimbabwe Industries (CZI) and copied to the Reserve Bank of Zimbabwe (RBZ), MSC says, “Our facilitation of trade through sea freight transportation of imports and exports has resulted in the accumulation of unremitted funds amounting to nine million, one hundred and three thousand, one hundred and eleven dollars ($9,103,111.00) due to our principals in Geneva…In 2018, through our importation of over 10 000 containers (i.e containers and ships being the property of MSC) of mainly food stuffs, agricultural inputs (fertilizers) and raw materials for industry (including mining), we have supported the country’s exports to the tune of close to 9 000 containers; 7 000 of which contained minerals (chrome, vermiculite, granite et cetera) and the balance contained tobacco.” In essence, MSC handles almost all essential imports and exports and discontinuation of service will be fatal to many industries and the economy at large.
MSC goes on to express their intent saying, “With the continued failure by the central bank to, having acknowledged our key role in trade, live up to their commitments, no alternative remains than discouraging cargo destined to Zimbabwe to load on our ships and/or at the very best accepting cargo subject to full payment in advance payable direct to our principals.” MSC’s presence in the country was meant to make it easier for the country to pay locally thereby reducing the hassle of having to transfer foreign currency to the principal company MSC Global. This not only reduced forex leakages but also eased the pressure on the RBZ as 90 to 120 days credit lines had been afforded to them. Now, all these arrangements are at the verge of collapsing. By directing the letter to the CZI, MSC is probably banking on the fact that CZI are better positioned to lobby government to settle the debt urgently. In any case, the chief importers and exporters are members of the CZI.
The lifeline of the economy
There is no argument that imports and exports are the lifeline of the country’s economy. According to the Reserve Bank of Zimbabwe Quarterly Economic Review for the third quarter of 2018, imports were at $1.713 billion, up 1.3% from $1.6913 billion in the second quarter. Exports increased by 16.5% from US $981.4 million in the second quarter to US $1.143 billion in the third quarter of 2018. It is also apparent that the country is on a drive to ramp up foreign currency earnings, with government opting to retain some of the foreign currency that exporters should be earning for use in essential sectors of the economy. Current shortages and high cost of raw materials have also pushed more and more manufacturers to import raw materials from abroad. Clearly, the country needs both imports and exports to drive meaningful economic activity.
As we await a response from either the CZI or the RBZ, this is a no brainer. The country cannot afford to lose out on imports and exports. Already, foreign currency problems have done much damage, slowing down trade across all sectors in the country. Completely shutting down MSC services will be the last nail on the coffin for our struggling economy.