‘Scrapping duty on key imports to cut prices’

CONSUMERS may benefit from the scrapping of import permits on several essential goods, including agricultural inputs and construction materials, as competition might improve, leading to reduced prices.

Through Statutory Instrument (SI) 6 of 2024, the Minister of Industry and Commerce made changes to the Control of Goods (Import and Export) Act, removing restrictive measures on certain imported key products.

The products that are no longer subject to import permit or licence requirements include data and network cables, tile adhesive, grout and tylon, fertiliser and fertiliser products (urea ammonium nitrate, NPK, compounds and blends CAN and LAN and single superphosphate) among others.

Commenting on the Government’s decision to scrap permits and licences, Zimnat Asset Management said; “The move aims to simplify trade processes, enhance market competitiveness, and potentially reduce prices.

“One immediate implication of removing import permit requirements is the potential for lower prices for consumers.

“Import permits and licenses often contribute to additional costs and bureaucratic processes, which can be passed on to the end consumers.”

Zimnat added that “Eliminating import permits and licenses for fertilisers and construction materials could boost the agricultural and construction sectors.

“Projected growth rates of minus 4,9 percent and 3,4 percent in 2024 for agriculture and construction, respectively, suggest that removing import restrictions on raw materials might cut production costs, enhancing sector productivity and potentially bolstering the country’s gross domestic product.”

However, the asset managers also believe that while the short-term benefit of removing import permits may lower prices for consumers, it is essential to monitor the broader impact on local industries.

“An influx of foreign products could challenge domestic producers, affecting employment and local industries’ health. Balancing competition with safeguarding local businesses is crucial for long-term economic sustainability,” Zimnat said.

Analysts said while consumers could benefit from lower prices in the short term, concerns persisted regarding the impact on local industries and the potential widening of the balance of payments deficit.

“Striking a balance between fostering competition and safeguarding domestic businesses is crucial for sustained economic growth. Ongoing monitoring is essential to ensure that the removal of import restrictions positively contributes to the agricultural and construction sectors while addressing potential challenges,” said one Harare-based economist who requested anonymity.