Mil­lions blown on need­less im­ports

The Sunday Mail (Zimbabwe) - - NEWS - Se­nior Re­porter

ZIM­BAB­WEANS are spend­ing a for­tune in for­eign cur­rency by im­port­ing non-es­sen­tial con­sumer goods, while im­por­ta­tion of crit­i­cal cap­i­tal and in­ter­me­di­ate goods re­mains de­pressed.

This, Pres­i­dent Emmerson Mnangagwa has said, is mil­i­tat­ing against quick eco­nomic re­cov­ery.

While forex re­ceipts have grad­u­ally in­creased over the last 12 months, spend­ing on con­sumer goods con­tin­ues to com­pete with out­lay on crit­i­cal eco­nomic en­ablers.

In his weekly col­umn in The Sun­day Mail, Pres­i­dent Mnangagwa says for­eign cur­rency in­flows grew by over 17 per­cent to US$5,6 bil­lion be­tween Jan­uary and Novem­ber com­pared to the same pe­riod last year.

He said the up­surge in forex re­ceipts was a sign of em­bry­onic ex­port ac­tiv­ity in the econ­omy.

How­ever, the Head of State and Gov­ern­ment notes, these gains are be­ing un­der­mined by un­re­strained spend­ing on con­sumer goods.

“The Re­serve Bank of Zim­babwe re­port on this year’s for­eign cur­rency sup­ply and de­mand up to the week of 16th Novem­ber, 2018, gives key in­dica­tive facts and fig­ures. I will iso­late just a few of these in or­der to raise a struc­tural is­sue con­cern­ing our econ­omy.

“The global for­eign cur­rency re­ceipts from Jan­uary to mid-Novem­ber stood at US$5,661 bil­lion, com­pared to US$4,822 bil­lion re­ceived dur­ing the same pe­riod last year.

“This rep­re­sents a 17,4 per­cent in­crease in re­ceipts, much of it point­ing to the grow­ing ex­port ac­tiv­ity in the econ­omy.”

Pres­i­dent Mnangagwa says the fig­ures ren­der false ar­gu­ments by some prophets of doom that Zim­babwe is in a down­ward spi­ral.

“Also, dur­ing the same pe­riod un­der re­view, global for­eign pay­ments de­creased by five per­cent to US$4,054 bil­lion from the 2017 fig­ure of US$4,264 bil­lion,” he con­tin­ues.

“We thus had a pos­i­tive for­eign cur­rency net po­si­tion of US$1,937 bil­lion, com­pared to US$582,9 mil­lion for the same pe­riod in 2017. All these are pos­i­tive trends.”

The Pres­i­dent says his ad­min­is­tra­tion will con­sol­i­date gains re­alised from in­creased forex re­ceipts through res­o­lute fis­cal con­sol­i­da­tion as an­nounced in the 2019 Bud­get, to trig­ger quick eco­nomic re­cov­ery.

“But the re­port also gives facts and fig­ures which made a wor­ri­some im­pres­sion on my mind. Our cash trans­ac­tions on im­ported con­sump­tion goods for the same pe­riod stood at US$839,4 mil­lion. Al­though lower than the 2017 fig­ure of US$1,055 bil­lion, still this fig­ure is too high.

“It gets wor­ri­some when read against the fig­ure of US$883,5 mil­lion which we spent on cap­i­tal goods, and an­other of US$705,5 mil­lion which we spent on in­ter­me­di­ate goods im­ports.

“Our spend­ing on im­ported con­sumer goods should never come any­where near our spend­ing on cap­i­tal and in­ter­me­di­ate goods.

“I raise this worry be­cause our econ­omy grows on greater in­vest­ments on cap­i­tal goods and in­ter­me­di­ate goods. It can­not grow on con­sumer im­ports.”

Fi­nance and Eco­nomic De­vel­op­ment Min­is­ter Pro­fes­sor Mthuli Ncube re­cently in­voked the Cus­toms and Ex­er­cise Act and im­posed duty in for­eign cur­rency on an ar­ray of goods that in­clude ve­hi­cles and meat to stem lo­cal ap­petite for im­ported con­sumer goods.

Goods listed for duty in forex in­clude fresh cheese, grated or pow­dered cheese of all kinds, fresh grapes, ground nuts, mar­garine, se­lected meat prod­ucts, poul­try prod­ucts, swine meat, pre­served fish and salt wa­ter.

The other prod­ucts on the list in­clude eggs, sugar con­fec­tionery, choco­lates, ce­re­als, sweet bis­cuits, bread, toma­toes, pota­toes, mush­rooms, beans, grape juices, se­lected cig­a­rettes, trunk suit­cases, hand­bags and toi­let linen.

Ac­cord­ing to a Statu­tory In­stru­ment pub­lished in the Gov­ern­ment Gazette in terms of Sec­tion 115 (3) of the Cus­toms and Ex­er­cise Act (Chap­ter 23:02) the new reg­u­la­tions came into ef­fect on Novem­ber 23.

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