Govt slammed over imports ban flip-flop

Source: Govt slammed over imports ban flip-flop – DailyNews Live

Eric Chiriga      22 May 2017

HARARE – Scrapping of government’s imports ban policy – Statutory
Instrument (SI) 64 – is long overdue, as the measure was “ill-advised and
never the solution” for Zimbabwe’s deepening economic crisis, economists
and industry players said.

This comes amid flip-flop in government’s position on the policy – which
escalates long-standing concerns on lack of clarity and certainty of the
investment-starved southern African country’s policies – by Industry
minister Mike Bimha.

On Saturday, Bimha said government was moving to scrap the controversial
SI64, which has seen hard-pressed consumers bear the brunt of Zimbabwean
industries’ incompetence by paying more for their overpriced local
commodities as compared to affordable imports, arguing that it had
achieved its objectives, but more importantly, he acknowledged that the
protectionist measure had ran into challenges that can only be addressed
by scrapping it.

“To address the challenge of the threat of retaliation from our trading
partners, government will replace the import management programme (SI64)
with a local content policy,” he was quoted as saying in the State media.

The policy’s challenges, he admitted, included creating a balance between
preserving jobs in the imports-focused retail and distribution firms and
in the local manufacturing industries.

However, in an apparent shift of position – which proves that ruling Zanu
PF government’s policies are murky, thereby dampening investor confidence
– Bimha told State media, hardly 24 hours later, that government will not
scrap the policy.

“It could take several months, or even years, before it (local content
policy) comes into effect,” he was quoted as saying.

But despite his vacillation, economists said the policy – introduced last
year, banning importation of cooking oil, cereals, sugar and creamers,
among many other basics – was ill-advised “right from the start”.

Respected economist Ashok Chakravati also a consultant to President Robert
Mugabe’s office and Cabinet, told the Daily News that “when SI 64 was put
in place, I was against it”.

“This is because the country was unilaterally contravening trade protocols
that were already in place and certain procedures that needed to be
followed were neglected. While it is true that sometimes we do need
protection for a short period, a blanket ban was not the way to go,” he
said.

Chakravati said instead, Bimha “…needs to consult with stakeholders like
the Confederation of Zimbabwe Industries and the Zimbabwe National Chamber
of Commerce for a tariff after identifying the strategic industries that
need protection”.

“I say this because I do not feel SI 64 has achieved what it set out to
do,” he argued.

Chakravati insisted that Zimbabwe was better off using the rand, as South
Africa is Zimbabwe’s major trading partner.

“My belief has always been rand adoption so that local players can compete
with South African industry, because it is South African products
inflicting the most damage. With rand adoption, most disruptions we are
seeing now would not have happened,” he said.

Renowned economist John Robertson weighed in arguing that “protectionism
is never a solution without comprehensive reforms and we said this when SI
64 was announced”.

“The fact that there is now talk about scrapping the instrument barely a
year after introduction points to a deeper problem, that of hastily
implemented policies which are put in place without proper consideration
and evaluation of consequences,” he said.

“The minister may protect local industry all he wants and this will only
lead to monopoly and price fixing. A more permanent and sustainable
solution, however, lies in introducing sound economic reforms as
prescribed by countless agencies like the International Monetary Fund.”

“From where I am standing right now I would say it is largely misleading
to say the SI achieved its objectives,” Robertson concurred with
Chakravati.

Pro-locally produced organisation Buy Zimbabwe’s chief cconomist, Kipson
Gundani, also told the Daily News that “the fact is SI 64 is not
sustainable and was not meant to last forever”.

“There are different schools of thought around SI 64, but from the
perspective of Buy Zimbabwe – who were strong proponents of the instrument
— whether this has been achieved within a year or not, I think it was not
achieved,” he said.

He argued that the instrument was supposed to deliberately create a market
for local manufacturers and allow growth while rebuilding capacity and
inefficiencies.

“As Buy Zimbabwe we are now pushing for a `Local Content Policy’, which
will be compatible with trade protocols. From his (Bimha) remarks, I would
like to assume the minister was referring to a policy graduation from SI
64 to something trade compatible, which is impressive as it would be more
results oriented as it will see companies localising their value chains,”
Gundani said.

“Whether SI 64 has achieved that it set out to do or whether that was the
best it could do that is another matter entirely. What we need now is to
graduate to a policy that will not attract retaliation from trade
partners,” he said.

Interestingly, Bimha once acknowledged that imposition of SI 64 was a
temporary measure.

“This fence that we have put will not last forever, at some stage we will
pull it down. It is therefore important for all local manufactures that
are benefitting from SI64 to realise that it will not be around forever.
The same way we introduced it, we will surely remove it,” he said.