Emcoz warns Zim of ‘Venezuelan’ way

The Employers’ Confederation of Zimbabwe (Emcoz) has warned nobody should want to see Zimbabwe descending into what is happening in Venezuela as the body rips into restrictions on imports.

Source: Emcoz warns Zim of ‘Venezuelan’ way – NewsDay Zimbabwe July 19, 2016

By Business reporter

Venezuela is grappling with food shortages as the economy carves in to decades of protectionism and fascist policies.

Government recently restricted the importation of some products under Statutory Instrument (SI) 64 of 2016 saying doing so required an import permit. The permit costs $30 and is valid for three months given only after one has satisfied authorities why they should be allowed to import the products.

In an analysis of the embargo, Emcoz said where the market was resorting to foreign products because of a lack of capacity to buy local products, removing the cheaper foreign products gave the consumer the difficult choice of either reducing consumption or doing without completely.

“There will, therefore, be little benefit to the local industry because aggregate demand will decrease while the population is thrown into dire poverty,” Emcoz said.

Emcoz said imposing restrictions on imports under current circumstances has the effect of “removing competition and no amount of legislative fiat will prevent prices from increasing”.

The employers’ body said the State should aim to sustain aggregate demand to drive economic activity adding the economy had informalised five years ago with an estimated three million people depending on cross border trading.

Emcoz said systemic conditions that impede on economic activities such as corruption, policy inconsistency and stable supply of utilities among others have to be addressed first “to prime our industries for growth” adding that “creating cartels will not achieve sustainable development”.

The body said a number of Zimbabweans working in South Africa found it better to send groceries rather than money back to their families.

“Remitting rand into Zimbabwe’s high cost environment will have dire consequences on the families.