via Govt to introduce import licences 15 December 2013 by Prince Mushawevato Sunday Mail
Faced with a rising tide of cheap imports and a local industry that is under severe stress, Government will from next year regulate the importation of goods by issuing import licences to businesses and individuals.
Zimbabwe is struggling with a negative current account balance, which continues to worsen the prevailing liquidity crunch.
Recent statistics from the Reserve Bank of Zimbabwe (RBZ) show that while the country’s exports improved to US$2,3 billion in the nine months to September, imports rose to US$6,6 billion.
South Africa, the continent’s biggest economy, remains Zimbabwe’s main source of imports, contributing more than 50 percent. Other source markets include the United Kingdom, China, the United States of America and Zambia.
The main imports are fuel, fertiliser, petroleum oils, motor vehicles, mobile phone handsets and accessories, live animals and animal products, fresh products, including ceramic products as well as foodstuffs.
Zimbabwe’s import bill has been rising over the past decade owing to sanctions imposed by the United States of America and the European Union bloc, which have shrinked the local manufacturing base.
Soaring imports continue to threaten the revival and viability of the manufacturing industry, which is operating below 40 percent of capacity.
As a result, players in the industry have been lobbying for Government to impose heavy tariffs on cheap imported products.
Minister of Industry and Commerce Mr Mike Bimha said in an interview last week Goverment has made interventions, some of which will be announced in the 2014 National Budget, to try and regulate imports.
“Importation of goods for commercial purposes is now going to be done after one gets a licence to do so, and it will be on a need basis not just for the sake of it. Again, it should also be noted that the imported goods should be of high quality, meeting international specifications.
“Government will have to be convinced of the need to issue the licence, be it to individuals or groups. We will first ascertain whether there is real need to import the product(s) before we clear one to import,” he said.
Soon after adoption of the multi-currency system in 2009, Government slashed duty on various products in a bid to alleviate commodity shortages, but the move triggered a flood of poor quality textiles, shoes, and electronic gadgets, thereby driving out locally-produced goods.
Minister Bimha said the new regulations were deliberately designed to work in tandem with the scrapping of duty on imported raw materials.
“We have already worked on a review of import tariffs and submitted recommendations to the Ministry of Finance, some of which will be factored into the national budget.
Government will also be removing duty on all imported raw materials to help reduce production costs and develop the local manufacturing sector,” added Mr Bimha.
Market experts, however, contend that heavy tariffs on imports were not a silver bullet. They reckon Government should channel its efforts towards addressing critical issues such as company closures, low capacity utilisation, erratic electricity supply, low farm productivity, liquidity constraints and under-capitalisation of banks.
“The low tariffs charged on imports have contributed (but not entirely) to the poor performance of the manufacturing sector. For industry to grow, Government needs to also address the issue of capitalisation, while industry must come up with production based remuneration methods,” noted Zimbabwe National Chamber of Commerce president, Mr Hlanganiso Matangaidze.
He noted that besides the manufacturing industry, the agricultural sector was also under siege from imports.
“GMOs are cheaper to produce and are coming onto the market with an unfair advantage, leading to the collapse of the agriculture industry in the country. We are slowly becoming a dumping ground and this scenario will be difficult to reverse in the long run,” he added.
Confederation of Zimbabwe Industries (CZI) former president Mr Kumbirai Katsande indicated that the Government move was warranted.
“We have a situation that needs to be addressed as a matter of urgency. The country is using an expensive currency and we are facing challenges from imports. What industry is calling for is not new. No country keeps the borders open in the face of competition from imports,” he said.
He, however, suggested that higher import tariffs should be supported by various mechanisms that promote industrial growth to avoid hiccups in the retail product supply chain.
“We cannot just sit and watch our industry collapse. Government needs to adopt measures that will allow local industry to survive and restore its economic capacity. These include provision of funds for retooling and restoration of utilities,” he added.
It is estimated that imported products make up 65 percent of supermarket shelves, with the remaining 35 percent being taken up by local products.
There are fears that if unchecked higher tariffs could push up prices due to high production costs and the absence of competition.