Industry mustn’t fret over duty-free imports
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.