In­dus­try mustn’t fret over duty-free im­ports

Chronicle (Zimbabwe) - - Front Page -

OUR econ­omy has a solid man­u­fac­tur­ing base which has, how­ever, been shaken by the chal­lenges of the past two decades. Many “made in Zim­babwe” prod­ucts are highly re­garded in Zambia, Botswana, Malawi, Mozam­bique and other coun­tries. How­ever, lo­cal in­dus­try’s ca­pac­ity to meet lo­cal de­mand and ex­port has been weak­ened by the pre­vail­ing eco­nomic chal­lenges. Aware of the dif­fi­cult eco­nomic con­di­tions that in­dus­try is op­er­at­ing un­der, the Govern­ment, in 2016 pro­mul­gated a law pro­tect­ing lo­cal man­u­fac­tur­ers from for­eign com­pe­ti­tion by re­strict­ing im­ports.

As a re­sult, in­dus­trial ca­pac­ity util­i­sa­tion has been im­prov­ing but with lim­ited fund­ing for re­tool­ing, af­ford­able, long-term lines of credit, the in­her­ent con­straints re­main. These chal­lenges were brought to the fore over the past three weeks when a run on the mar­ket left shops empty of a wide range of prod­ucts. Many busi­nesses are now sell­ing their prod­ucts in for­eign cur­rency which the ma­jor­ity of our peo­ple lack. Life has there­fore been tough for or­di­nary cit­i­zens, al­ready strug­gling amid the sus­tained eco­nomic chal­lenges. The turn of events was so rapid and un­ex­pected just as we thought the econ­omy was tak­ing off af­ter the July elec­tions, build­ing upon the solid foun­da­tion that the Govern­ment has laid since Novem­ber last year.

Cook­ing oil dis­ap­peared from shop shelves, but where it is avail­able, the price has is $10/two litre bot­tle, up from around $4 just about a month ago. In shops where it is man­agers are giv­ing con­di­tions for cus­tomers to buy it such as to say they should buy other goods worth at least $10 for them to be able to buy cook­ing oil at the nor­mal price. The much-loved Ma­zoe Or­ange Crush is in short sup­ply too and where it is the con­di­tions of ac­cess are the same as those ap­ply­ing to cook­ing oil.

The price of meat has sim­i­larly shot up, a kilo­gramme of it be­ing sold for at least $10 for the low­est grade and choice cuts sell­ing for up to $20/kg. At some point, there was com­pletely no ce­ment on the mar­ket but it later resur­faced be­ing sold for US$10/50kg bag or its equiv­a­lent in rand. Hard­ware shops are also re­ject­ing payment for the build­ing ma­te­rial through trans­fers or bond.

Faced with this na­tional emer­gency, the Govern­ment opened the borders to duty-free im­port.

Com­pa­nies and in­di­vid­u­als with off­shore and free funds can im­port an­i­mals oils and fats, baked beans, body creams, bot­tled wa­ter, ce­ment, ce­re­als, cheese, cof­fee creams, cook­ing oil, crude soya bean oil, fer­tiliser, fin­ished steel roof­ing sheets, wheat flour, ice cream, jams, juice blends, mar­garine, may­on­naise, pack­ag­ing ma­te­ri­als, peanut but­ter, pizza base, potato crisps, salad creams, shoe polish, soap, sugar, syn­thetic hair prod­ucts, wheel bar­rows, agro­chem­i­cals and stock feeds with­out pay­ing duty.

In­dus­try has voiced con­cern over the de­ci­sion which they say would re­verse the gains they have scored since 2016. Yes, they have cause to be un­happy but an en­cour­ag­ing point is that the Govern­ment has made it clear that the eas­ing is only tem­po­rary.

In­dus­try and Com­merce Min­is­ter Man­gal­iso Ndlovu said:

“We are mind­ful of the con­cerns of in­dus­try and I have been reg­u­larly meeting with them … What is im­por­tant is that this pol­icy is tem­po­rary and it has come into ef­fect to pro­tect the gen­eral pub­lic who were suf­fer­ing be­cause of the short­ages and spec­u­la­tive ten­den­cies by those who were charg­ing out­ra­geous amounts.

“We are very ap­pre­cia­tive of the progress be­ing made by some of our in­dus­tries which are per­form­ing well in a tough environment. What is im­por­tant to note is that pro­duc­tion by our in­dus­tries has not gone down; it is the de­mand for goods that has gone up. We had to come up with this in­ter­ven­tion in light of the im­mi­nent fes­tive sea­son where de­mand for goods is very high. Go­ing for­ward, we will con­tinue to re­view the sit­u­a­tion and we will con­tinue to work with our lo­cal in­dus­tries to come up with so­lu­tions that ben­e­fit ev­ery­one.”

For­eign com­pe­ti­tion will po­ten­tially crip­ple the lo­cal man­u­fac­tur­ing sec­tor that ac­tu­ally needed some form of pro­tec­tion as it strug­gles to get back on its feet. Some jobs in that sec­tor could be lost. De­mand for for­eign cur­rency is seen ris­ing as peo­ple seek it to im­port the ba­sics.

The Govern­ment is aware of this, hence the tem­po­rary amend­ment of SI 122. This must as­suage in­dus­try con­cerns over the Tues­day de­ci­sion. As the ban sub­sists, the Govern­ment will con­tinue with its ef­forts to cre­ate an environment favourable for lo­cal man­u­fac­tur­ing to thrive and be able to pro­duce enough for lo­cal de­mand so that the scarci­ties of the past few days don’t re­cur. Mea­sures to cre­ate spe­cial eco­nomic zones should be quick­ened, in­dus­try should be re­tooled while on­go­ing ef­forts to at­tract lines of credit and for­eign di­rect in­vest­ment and the reen­gage­ment drive should be in­ten­si­fied.

Govern­ment, through the RBZ, will con­tinue sup­port­ing the pro­duc­tive sec­tor through for­eign cur­rency al­lo­ca­tion to en­sure that they ad­e­quately stock up for the forth­com­ing fes­tive sea­son; that more re­sources be chan­nelled to­wards pri­mary pro­duc­tion, par­tic­u­larly agri­cul­ture, with fo­cus on soya beans and wheat; that ef­forts be taken to im­prove lo­gis­tics for fuel sup­ply

But all these ef­forts might come to naught if our busi­ness sec­tor does not play to the rules. One sad re­al­ity about our busi­ness sec­tor is that it is reck­lessly undis­ci­plined. Chal­lenged to ex­plain why there are short­ages on the mar­ket and why prices have shot up, man­u­fac­tur­ers and re­tail­ers are blam­ing each other; re­tail­ers ac­cus­ing man­u­fac­tur­ers of charg­ing them high prices and man­u­fac­tur­ers in­sist­ing that their prices haven’t changed, blam­ing re­tail­ers for in­creas­ing prices uni­lat­er­ally. This must stop.

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