Business should look itself in the mirror

CONSUMERS recently woke up to very steep and discomforting price increases for some cordials, which they were told had been occasioned by the sugar tax introduced by the Ministry of Finance, Economic Development and Investment Promotion in the 2024 National Budget. Prices of some brands markedly rose from about US$3,50 per two-litre bottle to an eye-popping US$5 in some instances. Curiously, the hefty increases were effected notwithstanding Treasury’s decision to cut the tax from the initially proposed US$0,002 per gramme of sugar in the beverages to the current US$0,001. So, the magnitude of the latest price increases — by more than US$1 in most instances — leads to questions about the sheer amount of sugar in these beverages. The principle behind the sugar tax in all jurisdictions where it has been introduced, from America, Europe to Africa, is to significantly reduce the health risks associated with consumption of the product. Public health experts say there is a correlation between the high consumption of sugar and conditions such as high blood pressure, inflammation, diabetes, fatty liver disease and weight gain or obesity, all of which can be linked to stroke or heart disease. If our locally produced cordials had healthy amounts of sugar, there would not have been marked increases in their prices. Conversely, if they indeed have decent amounts of the ingredient, it raises serious issues about the probity of manufacturers and retailers insofar as their pricing is concerned. So, either way, business has a moral case to answer. Judging by the brouhaha that followed the introduction of the sugar tax, one would have been forgiven for thinking such a policy was peculiar to Zimbabwe. Well, it is certainly not. As recent as 2018, the United Kingdom introduced the soft drinks industry levy as an anti-obesity measure. It is applied on both locally produced and imported drinks containing added sugar. A charge of 8 pence (about US$0,09) per litre is levied on soft drinks containing between five grammes and eight grammes per 100ml, while drinks that have more than eight grammes per 100ml attract a charge of 24 pence (about US$0,27) per litre. The tax, however, does not apply to soft drinks containing less than 5g of sugar per 100ml. Just about the same time, South Africa introduced a tax on sugar-sweetened beverages, which was known as the Health Promotion Levy. Earlier, in 2014, Mexico had also introduced a 1-peso-per-litre tax on beverages containing added sugar. Of course, there are many other countries that have a similar tax. Various studies by experts have since concluded that the levy demonstrably leads to a reduction in consumption of sugar. In our case, the additional revenues raised from the new pool of funds will not only make a difference in the public health sector after decades of underinvestment, but will also reduce the health burden associated with sugar-related non-communicable diseases. Business, therefore, needs to support and complement the noble objectives being spearheaded by the Government, which has noticeably become pro-business, particularly under the Second Republic. This is not the first time actions by business have come under scrutiny. Despite being favoured with cheap forex from the auction market, including protection from imports, local consumers continued to get a raw deal, prompting the Government to lift import restrictions on basic commodities in May last year. Even today, consumers continue to smart from forward pricing models adopted by retailers to ostensibly counteract the impact of exchange rate volatility. This obviously breeds anxiety, as well as negative perception and sentiment in local markets, which are antithetical to economic growth. Cooperation and joint efforts from all stakeholders, including the Government and business, especially the latter, will make the journey towards Vision 30 easier, not harder. It is time business looked at itself in the mirror and question whether it is doing everything possible to complement Government efforts. We are in it together. As President Mnangagwa always says, we are one people under one flag and one national anthem. We either sink or swim together.