‘Social contract, devaluation to stem imports’

‘Social contract, devaluation to stem imports’

ZIMBABWE continues to lose millions of dollars importing food stuffs that can be produced locally, following the collapse of the agricultural sector over a decade ago.

Source: ‘Social contract, devaluation to stem imports’ – NewsDay Zimbabwe March 13, 2017

BY MTHANDAZO NYONI

Figures released by the Zimbabwe National Statistical Agency (ZimStat) showed that the country imported food and beverages worth $54 million in January this year, up 11% compared to the same period last year, mainly for household and industry consumption.

In 2016, the country squandered $654m on food stuffs alone.

Zimbabwe imported maize worth $18m in January, rice ($12m) and durum wheat ($8m).

Economic analysts said the nation has a high appetite for foreign products, and urged government to consider social construct and devaluation.

“It’s a clear sign that we are not able to produce as a country. We have also a high appetite for foreign products.

To solve this, we need a social contract as well as devaluation. These are two things that we can’t run away from at the moment. We need them like yesterday,” Reginald Shoko, an economic analyst, said.

The central bank has been calling for internal devaluation, through the reduction in the cost of doing business, to make local firms competitive.

Shoko said the fact that the country spent $54m on food stuffs alone in January, meant that $54m worth of jobs were exported.

Another economic analyst, Believe Mhlanga, said the $54m figure was not sustainable for a country, which is desperately in need of foreign currency.

He attributed high imports to the collapse of local industry, 15% value-added tax (VAT) introduced by government in early January, drought as well as annual shutdown for companies.

The government recently imposed a 15% VAT on all meat products and cereals under Statutory Instrument 20 of 2017.

However, the instrument was swiftly shelved following a public outcry, after it triggered price increase in basic commodities.

“The country should try to promote local industry with regards to lowering costs. Some companies have difficulties in accessing working capital. I, therefore, recommend the Reserve Bank of Zimbabwe to consider giving local companies working capital,” Mhlanga said.

He also urged the central bank to be strict on imports, but that should not be forced, “but induced by issue of supply and demand”.

Latest figures released by ZimStat revealed that Zimbabwe imported goods worth $385m in January, against exports of $259m.

In 2016, Zimbabwe’s exports decreased by 7% to $3,37 billion from $3,61bn the previous year.

Imports also declined by 11% over the same period, to $5,35bn from $6bn in 2015.

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