BY MELODY CHIKONO
Buy Zimbabwe, the lobby group that campaigns for the consumption of local goods, warned yesterday that government’s decision to suspend duty on a cluster of basic commodities including salt, would ignite a fresh wave of de-industrialisation.
Zimbabwe’s industries, battling to forestall a brutal crisis, which intensified after President Emmerson Mnangagwa instigated fresh waves of uncertainty through a directive forcing banks to stop lending, were charting a recovery trajectory.
Last week, the Confederation of Zimbabwe Industries (CZI) said industrial capacity utilisation rose to 56,25% last year, the highest since 2011, when 57% of industrial plants were running.
Data from the Industry and Commerce ministry indicates that up to 75% of products in Zimbabwean supermarkets are now local.
The figure had been projected to continue rising until markets were turned upside down by Mnangagwa’s drastic move, which sparked country-wide shortages of basic commodities and rocketing prices.
In response to the shortages, Finance and Economic Development minister Mthuli Ncube opened the floodgates yesterday through a series of actions, including duty waivers to stem a potential catastrophe.
Duties were suspended on key products including salt, rice, flour, sugar, margarine, maize meal, milk powder, infant formula and tea.
The firefighting authorities also suspended duty on petroleum jelly, toothpaste, bath soap, laundry bar and washing powder hoping to flood the market with cheaper imports, mostly from South Africa and stem market mayhem.
Importation of these product lines had been banned in Zimbabwe since 2009, when government made far-reaching reforms to protect domestic firms.
In response to yesterday’s move, Buy Zimbabwe general manager Alois Burutsa said domestic firms were under threat.
“This development is likely to reverse the industrialisation gains that had been made by local industry in the supply of basic commodities,” Burutsa said.
“Local industry had capacity utilisation of up to 65% while 75% of shelf space is now taken up by locally-produced goods. These gains are now under threat if anyone with free funds is importing basic commodities at lowered tariffs,” Burutsa added.
“We have belief and confidence that if the local industry is supported by government, Zimbabwean companies will not only provide products which are cheaper and competitive but can also satisfy local market demand and the export market,” he added.
On Monday CZI president Kurai Matsheza said instead of opening the floodgates, government should reduce duty on raw material imports.
“The imported goods will be on our shelves. So the productive sector out there will be very busy filling our shelves here. So if you look at the value chains that are involved, they are killing our economy. So I don’t think that helps at all,” Matsheza said while also pointing out that the failure of the Reserve Bank of Zimbabwe’s foreign currency auction system resulted in industry failing to access US dollars.
“We import crude oil from Brazil, so we need foreign currency, but the auction has been failing to give manufacturers sufficient US dollars to be able to import. On the issue of mealie-meal shortage, it has something to do with the fact that the government stopped millers from buying except the Grain Marketing Board, which created bottlenecks on the supply chain. It depends on how the government will act. The policies put in place will determine whether the situation gets back to normal or not,” Matsheza said.
Denford Mutashu, Confederation of Zimbabwe Retailers president said: “The waiver is meant to strengthen supply of key basic commodities that retailers and wholesalers have been struggling to access from local suppliers. Most shelves were getting empty on products like sugar and cooking oil, a scenario that left our sector in limbo. Lifting import ban and reducing duty is a good measure that leaves consumers with increased choice although it is a blow to local manufacturers”.