Im­port re­stric­tions meant to re­vive in­dus­try

Chronicle (Zimbabwe) - - Analysis - Anal­y­sis Yoliswa Dube

STATU­TORY In­stru­ment 64 of 2016 which many have in­ter­preted as ad­vo­cat­ing for the “ban” of im­port goods has met with mixed re­ac­tions. The or­di­nary Zim­bab­wean felt the Gov­ern­ment had cut off a life­line while cap­tains of in­dus­try found the move likely to pro­mote their busi­nesses. The piece of leg­is­la­tion was in­tro­duced to stem the flood of cheap im­ports into the coun­try which were un­der­min­ing lo­cal in­dus­try and sti­fling ef­forts to cre­ate jobs.

It was also in­tro­duced be­cause Zim­babwe had be­come a rich fish­ing pond for the eva­sive US$. Also, the Gov­ern­ment said it in­tro­duced SI64 in re­sponse to pe­ti­tions by lo­cal pro­duc­ers, who said they were un­der siege from un­con­trolled im­ports claim­ing they could meet lo­cal de­mand.

“If peo­ple are no longer able to im­port cer­tain goods, it means my source of in­come is also af­fected. The move by Gov­ern­ment was abrupt and I’ve not had the op­por­tu­nity to bridge the gap that it will cost me fi­nan­cially,” said Mr By­ron Moyo, a malay­it­sha.

His ex­tra pick­ings, which largely come from trans­port­ing goods from neigh­bour­ing South Africa, have since di­min­ished since the in­tro­duc­tion of SI64. “It has be­come ex­tremely dif­fi­cult to op­er­ate. Ev­ery­one is skep­ti­cal. A chain of peo­ple is af­fected by all this and to be hon­est, it’s do­ing no one any good.

‘‘Gov­ern­ment needs to ad­dress the needs of the peo­ple be­fore in­tro­duc­ing some of th­ese poli­cies,” he said. Mr Moyo’s trips to South Africa have be­come less lu­cra­tive, de­spite hav­ing to travel to the neigh­bour­ing coun­try ev­ery other day to make that much needed cash.

After all, he has a fam­ily to feed and chil­dren to ed­u­cate. In­dus­try is happy to en­joy the ben­e­fits of im­port re­stric­tions but is re­sist­ing meth­ods pro­posed to in­cen­tivise ex­ports.

The Con­fed­er­a­tion of Zim­babwe In­dus­tries has come out in full sup­port of SI64, ar­gu­ing that im­ports had not only led to dein­dus­tri­al­i­sa­tion but had also drained the econ­omy of $36 bil­lion in six years since dol­lar­i­sa­tion, given the coun­try’s es­ti­mated an­nual im­port bill of $6 bil­lion.

In­dus­try has also com­plained about the high cost of lo­cal pro­duc­tion.

“Man­u­fac­tur­ing sec­tor’s ca­pac­ity util­i­sa­tion, which stands at 34 per­cent (as at 2015) clearly shows that the coun­try has idle ca­pac­ity of over 60 per­cent, which can be used for im­port sub­sti­tu­tion,” ar­gues the CZI in sup­port of the SI.

The Gov­ern­ment has been clear that im­port re­stric­tions are not for­ever, mind­ful of its obli­ga­tions to re­gional trade pro­to­cols and the broader de­sire to re­move trade bar­ri­ers on the con­ti­nent.

Vice Pres­i­dent Em­mer­son Mnan­gagwa re­cently said while the piece of leg­is­la­tion was meant to pro­tect lo­cal com­pa­nies from un­fair com­pe­ti­tion, en­hanc­ing com­pet­i­tive­ness re­mained a long-term so­lu­tion.

He un­der­scored the need to de­velop a ro­bust im­port sub­sti­tu­tion strat­egy meant to re­place im­ported prod­ucts with lo­cal goods while urg­ing con­sumers, in­clud­ing the Gov­ern­ment, to em­brace lo­cal com­modi­ties.

“We need to ap­pre­ci­ate that re­stric­tions are not per­ma­nent and that in the long term, pres­sure from trad­ing part­ners will al­ways force us to open our mar­kets again.

‘‘In­dus­try must ap­pre­ci­ate the im­por­tant role that com­pe­ti­tion plays in the global econ­omy. We risk clos­ing our­selves out of the global mar­ket and fail to de­velop in line with global trends,” said VP Mnan­gagwa.

He said for the coun­try to be com­pet­i­tive again, a model that looks at ma­jor costs and prices to come up with a range within which costs and prices may fall, as guided by agreed re­gional bench­marks, should be de­vel­oped.

“I urge you to al­ways re­mem­ber that as we pur­chase for­eign prod­ucts, we ac­tu­ally make for­eign-based com­pa­nies to at­tain crit­i­cal vol­umes that al­low them to en­joy economies of scale and hence cut prices on us,” said VP Mnan­gagwa.

Eco­nomic an­a­lyst Dr Dav­i­son Gomo said the in­ten­tions of the Gov­ern­ment are very re­spon­si­ble be­cause a coun­try can­not watch while its in­dus­try is be­ing suf­fo­cated by cheap im­ports.

“In the last 15 years, the coun­try has ex­pe­ri­enced se­ri­ous haem­or­rhag­ing. In­dus­try can’t deal with the daily needs of the peo­ple but in the long term, how can you get in­dus­try to func­tion as well as cre­ate em­ploy­ment with­out in­tro­duc­ing th­ese poli­cies. It’s a bold move to cor­rect the sit­u­a­tion,” said Dr Gomo.

By hav­ing a func­tion­ing in­dus­try, he said, Zim­babwe can pro­duce goods which can be put on the export mar­ket and earn the coun­try some money.

“Peo­ple are an­gry be­cause they were not given an op­por­tu­nity to pre­pare. Those who buy and sell goods were crip­pled by the move.

‘‘In the mean­time, cus­tomers can’t get what they want at the price they want. I un­der­stand why the public is re­act­ing, there’re no jobs in the short term,” said Dr Gomo.

“Re­viv­ing in­dus­try will at­tract in­vest­ment into the lo­cal mar­ket. We’ve got the in­fra­struc­ture and the ex­per­tise. With in­dus­tri­al­i­sa­tion, a lot of the prob­lems we’re fac­ing as a coun­try will be ad­dressed.”

It is crit­i­cal that peo­ple em­brace the long term ben­e­fits of the in­tro­duc­tion of SI64, he said.

“We need to look at the long term in­ter­ests of the coun­try. In or­der for man­u­fac­tur­ing to take place suc­cess­fully, we need peo­ple that are pre­pared to do things oth­er­wise the pol­icy will go to waste,” said Dr Gomo.

It is up to Gov­ern­ment to cre­ate the space to pro­mote lo­cal in­vest­ment, he said.

“Peo­ple needed to be pa­tiently ex­plained to in or­der for them to un­der­stand the long term ben­e­fits the pol­icy will bring. The gov­ern­ment failed to man­age the process which doesn’t of­fer short term so­lu­tions to its peo­ple, that’s why they feel robbed by the leg­is­la­tion. They were not given the chance to pre­pare for it.”

Some of the prod­ucts which were re­moved from Open Gen­eral Im­port Li­cence are bot­tled wa­ter, may­on­naise, salad cream, peanut but­ter, jams, Ma­heu, canned fruits, veg­eta­bles, pizza, yo­ghurts, flavoured milks, dairy juice blends, ice creams, cul­tured milk, cheese, cof­fee cream­ers, cam­phor creams, white petroleum jel­lies, body creams and plas­tic pipes.

The leg­is­la­tion also con­trols im­por­ta­tion of sec­ond hand tyres, urea and am­mo­nium ni­trate fer­tilis­ers, tile ad­he­sives and ty­lon, shoe pol­ish and syn­thetic hair prod­ucts.

Goods cat­e­gorised as builder-ware prod­ucts in­clud­ing wheel­bar­rows (flat pan and con­crete pan), roof­ing frame­works, pil­lars, col­umns, balustrade, shut­ters, tow­ers, masts, roofs and roof­ing frame­work are also part of the re­stricted list.

VP Em­mer­son Mnan­gagwa

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