SA currency knocks Zimbabwe's textile industry

ZIMBABWE'S SALES to South Africa have taken a sharp knock because the plunging rand has made the country's products more expensive. Economists in Harare told FTW that textiles and clothing had been particularly hard hit.
This was always going to be the case, and what makes it worse is that so many of South Africa's exports to us are effectively subsidised, making the trade imbalance of eight to one in Pretoria's favour that much worse, said an economist with an international commercial bank.
The problem has been highlighted by one of Zimbabwe's two biggest textile exporters. Spinweave c.e.. Peter Dorward says: The dollar has revalued against most of our European-determined export currencies by a monthly moving average of 8 % and by 16% against the rand and the pula since the year end. Our monetary authorities have simply not adjusted the dollar in line with inflation differentials.
Importers may well be delighted. But this short term Reserve Bank policy smashes our export competitiveness and 'value added' beneficiation Ñ so admired by economists and the World Bank/IMF.
He accuses the authorities of not wanting to create the climate for successful export based manufacturing companies.
Relief for companies such as this may be at hand. The Zimbabwe currency's value has fallen from 18 to 18.9 against the United States dollar and from 2.5 to 3 against the rand in recent weeks.
The downside of this of course is that it will make imported raw materials more expensive, said the commercial bank economist.
By Martin Rushmere