Learnt nothing, forgotten nothing

May 19, 2022

Government has long been accused of lacking policy consistency which unsettles businesses and scares away potential investors.

As if living up to that tag, Finance and Economic Development minister Mthuli Ncube did not disappoint when, in a night announcement, gave a directive that extended beyond the night as he opened the borders for the importation of basic commodities using free funds.

The move comes amid rising prices in the prices of basic goods taking a cue from the depreciation of the local unit against major currencies.

In one fell swoop the relief industry recently got such as liquidating the surrendered forex at the interbank rate has fallen away.

The irony of this all is that this will make Zimbabwe a supermarket economy as foreign products flood shop shelves.

All economies are inward looking following the disruptions of global supply chain caused by the twin evils–the Covid-19 pandemic and the Russia-Ukraine war.

Import-substitution is the new buzzword as economies build scale locally in preparation for potential shocks.

For Zimbabwe, there is a new threat of the 5th wave which is troubling regional powerhouse South Africa.

This threat should behove Zimbabwe to build local capacities.

The importation of these basic products means they can be sold in foreign currency throwing into disarray the government’s de-dollarisation programme.

The local industry is on a growth trajectory and require some house keeping to bring it on a better keel.

Its concerns have been clear: the sector requires foreign currency, consistency in electricity supplies and an environment with policy predictability.

Against all odds, the local manufacturers have ensured that products are on the shelves of shops as they ramp up output.

As a thank you to that, the government has opened the way for imports.

What is going to happen is that local products will disappear from the shelves and flood the popular “tuckshops” where they will be sold in foreign currency to compete with imports.

Already, there are reports that some products are missing on the shelves in response to a recent decree which banned lending to corporates in futile bid to halt the depreciation of the local currency.

Where will those that have no access to foreign currency supposed to buy basic products?

What the government needed to do was to address the bottlenecks afflicting the industry such as the failure by the central bank to allot the foreign currency with a backlog of more than 10 weeks and steady supplies in water and electricity.

President Emmerson Mnangagwa has directed the central bank to ensure that the backlog is cleared by month–the third deadline set by the government after it failed to meet two previous timelines.

The collapse of the local industry will come with dire consequences.

 

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