LIVINGSTONE MARUFU
Business lobby group, the Zimbabwe National Chamber of Commerce (ZNCC) says the move by the government to lift import restrictions on basic goods is counterproductive and risks causing damage to local industry.
Government recently opened the borders as part of efforts to deal with escalating prices of basic goods in the economy.
But, ZNCC said the move would make local products uncompetitive.
“…Removing import controls at a time when Zimbabwe is starting to generate most of its needed raw materials for value addition is therefore counterproductive and will reverse the gains hitherto accrued in agriculture.
“Given how the playing field is still not even for value chains in Zimbabwe compared to value chains from countries where other finished products are sourced, a blanket removal of import controls is not the sustainable way to solve the market distortions,” ZNCC said.
It said in this post-Covid era, most African economies have been taking an inward-looking approach, to strengthen their economic bases and protect their bases, and Zimbabwe should be also pursuing the same growth philosophy.
ZNCC said the consequences could be dire.
“Some businesses, faced with such a scenario, might be compelled to stop or reduce production and start trading (importing finished products and selling them locally). However, this implies killing local industry and jobs,” ZNCC said.
With Zimbabwe having liberalised the importation of basic commodities, the neighbouring countries that have favoured national tariffs on products such as maize, wheat, cooking oil, and flour, among others have the edge over the country.
According to Statutory Instrument 80 of 2023, the commodities on the list are cooking oil, maize meal, milk, sugar, rice, flour, salt, bath soap, laundry soap, washing soap, washing powder, toothpaste and petroleum jelly.
These products fall under 52 national harmonised system nomenclatures, and they are now being imported duty/tariff-free, regardless of the country of origin.
The basic commodities, which have now been exempt from import controls, were generally attracting customs tariffs of between 10% and 15%, before the recent policy announcements.
In previous circumstances when authorities effected import exemptions, the consideration was justifiably that of inadequate domestic supply.
Some of the noted instances are SI 247 of 2019, which suspended duty on wheat flour and maize meal, as was the case with SI 119 of 2020 as well as SI 303A of 2020.
The government also suspended duty on powdered milk through SI 06 of 2021, because domestic supply was inadequate, and it did the same through SI 224 of 2021 as well as SI 266 of 2021 and SI 222 of 2022.
The government also considered domestic supply when it suspended duty on commercial tyres through SI 195 of 2020 and SI 160 of 2022.
The same considerations were taken on board when the government suspended duty on fertilisers through SI 243 of 2021 as well as SI 31 of 2023, as the local industry can only meet 15% of national demand.
The policy announcements, which come for the second time in less than twelve months, affect different sectors of the Zimbabwean economy differently.
When the government removed import controls on basic commodities in 2022, through SI 98 of 2022, it was somewhat justified because it was a drought year and local production was low to meet domestic requirements.
Given the strong linkages between Zimbabwe’s manufacturing sector, with agriculture, which provides 60% of inputs needed by the local manufacturing sector, a fall in agricultural production means low and expensive inputs in the manufacturing sector, which also makes production expensive.
However, thanks to the programmes implemented by the government, agriculture production has grown in the 2022/2023 agricultural seasons, with self-sufficiency achieved in cereals such as wheat, which recorded 375,131 metric tonnes and maize, which is expected to produce a yield of 2,3m tonnes.
“At the moment, Zimbabwe cannot do away without tariffs as the local agriculture sector is less competitive relative to South Africa, especially on maize production,” ZNCC said.
