The Interview: I’ve no power to ban goods, says Bimha

Source: The Interview: I’ve no power to ban goods, says Bimha | The Herald  July 9, 2016

The recent gazetting of Statutory Instrument 64 restricting the importation of non-essential goods, which came into effect on July 1, has sparked a lot of controversy, especially through its framing as a “ban”, much to the prejudice of consumers. However, Industry and Commerce Minister Mike Bimha (MB) tells The Herald’s Political Editor Tichaona Zindoga (TZ) that he is not empowered to ban any goods but simply to regulate the flow of imports.

TZ: Cde Minister there has been a furore over what people are calling a ban on certain commodities arising from a Statutory Instrument that you issued recently. Can you explain and contextualise what this development is all about?

MB: Alright, first of all it is wrong to refer to the Statutory Instrument as a ban. It is not a ban. There is a Control of Goods Act, Chapter 14 and this Act empowers the Ministry of Industry and Commerce to regulate the importation and exportation of products in Zimbabwe.

Now that Act doesn’t give the Minister the power to ban. It gives him the power to regulate the importation and exportation. Now it presupposes that there will be reasons that have to be given for the Minister to exercise those powers. You don’t just exercise those powers willy nilly.

You need to have good reasons and you also have to take it through the process of cabinet where cabinet has to approve these reasons and be able to give you the mandate to go ahead. Now there are a number of issues to deal with why now, why make use of this particular Act and come out with a SI.

Firstly, we all embrace Zim-Asset which is basically our blueprint to grow our economy. What does growing the economy mean? It means creating employment, it means providing goods and services for the people. Now Zim-Asset makes reference to the resuscitation of industry as one of the cornerstones and that falls within the purview of my ministry -to ensure that we bring back life to the manufacturing sector.

In terms of bringing back those who are “dead” but can be resuscitated, in terms of keeping those who are there to continue to be there and also to make sure that there are new players who come in to take an active role in production.

Zim-Asset also addresses the issue of value addition and beneficiation. And what is value addition and beneficiation? It is really more of making use of our abundant resources in agriculture, in mining, in natural resources. Making use of our people to convert these into value added products which we can produce, meet the local demand and export.

That is value addition and beneficiation. Now, apart from Zim-Asset we are also party to the industrialisation strategy of SADC which was approved in Harare. We are also part of the Tripartite Free Trade Area of Comesa. We are also part of the Continental Free Trade Area of the African Union. In all these regional groupings the issue is industrialisation.

You cannot be part of all this if you have no industry to talk about. The issue is that we have an obligation to build our own industry. There are so many reasons as to why our industries died, which we then referred to as de-industrialisation. This was due to lack of capital, lack of equipment, lack of technologies and a number of other things.

There is the issue of a surge of imports — imports of things that we can produce — and the issue of substandard products coming into this country. Now we have already catered for the substandard side by bringing Bureau Veritas to do the testing but we were still faced with a lot of imports coming, of things that we can make. We import water, we import toothpicks, we import toilet paper, we import a whole array of things that we can produce.

We need to address this. Therefore, one way which was open to us was to discuss with the private sector, those who make the goods, and say, what are those things that you can make? We also went to verify. We also instituted ad hoc committees constituting players in the private sector who went around the country to establish issues around imports, what we could import and what we could not import and they came out with all these recommendations.

TZ: So you did consult before coming up with these measures?

MB: We did, and it was with the private sector. These committees didn’t have anyone from Government and I want to thank the private sector because they did it on their own using their own resources. And they came up with a whole range of recommendations, some of which we are already taking on board on our ease of doing business programme which the Vice President is spearheading as well as the Office of the President and Cabinet.

Now on the imports side, there was the issue that we needed to make sure that we only import what we don’t produce hence the coming of this Statutory Instrument which is not a ban by the way. And I want to stress this, it is not a ban because you can still import if you want provided you justify why you want to import.

There are instances where we allow importation. If for example, some of the products that were listed for whatever reason our industrialists cannot produce, maybe there is a strike or a shutdown, or maybe there are raw materials missing and their production goes down, we will allow importation.

There might even be a situation where they are producing there is a surge of demand and all of a sudden people want this product but the manufacturers can’t meet the demand, we will allow importation. So this is not a ban, it is more of regulation.

It is regulating the importation of certain products, but it doesn’t mean that individuals who go out to get goods for individual consumption are also penalised. We are not saying that. There are certain goods that are allowed for any individual for individual consumption. So the old ambuya who goes across the border and comes back with a bag or two of mealie-meal, a packet of sugar, a bottle or two of cooking oil, we are not targeting that.

Unfortunately, the SI doesn’t actually address those issues because these issues are dealt with administratively. We have already discussed with Zimra which is going to, if it has not already done so, issue communication and notices to tell people that you are allowed to bring this without a license.

So these are exempt. We are also exempting goods for deceased estates, we are also exempting those diplomats and returning residents coming back to this country. All these are catered for in an administrative manner. Our target is those who are importing large stocks for goods for resale. That is what we are targeting.

TZ: There is an ongoing discussion about what should come first, regulation or so-called import bans or resuscitation of local industry. What is the ideal way?

MB: I don’t think it’s a question of which comes first, both strategies should go simultaneously because different sectors react differently. So we will continue to try and support our industry in so many other ways but at the same time be able to expect them be able to grow.

TZ: From the reports that we are getting, South African businesses are crying so much, especially those in the border town of Musina, there is a fear that it may soon become a “ghost town” because of limitations on imports. What does that tell us about the relationship between Zimbabwe and South Africa in terms of trade?

MB: Let us not even talk about the relationship first, let us talk about what is the significance of that? It is sending you a message. It gives a message that if those people are demonstrating, what it means is that Zimbabwe has been giving them employment, giving them business. What we are saying is that Zimbabweans please also give business to your industries here.

If you give business to our local industry, we are creating employment for ourselves. If we give business to those people in Musina, who will we employ? So it is a very clear demonstration to mean there was something wrong. I like the fact that they came out and demonstrated. It shows that what we are trying to correct. It means there was something wrong.

To me it has nothing to do with our relations. South Africa, even with all these measures remains our biggest trading partner. The second thing is that we buy more from South Africa more than what they buy from us. So to me it doesn’t change, it is only our expression, that we want to level the playing field.

We are importing $6 billion worth of goods and exporting only $3 billion. That is unsustainable. And it is has resulted in some of the problems that we have, cash shortages etc. It is unacceptable. There is no way that we can produce everything that we need. South Africa is advanced in terms of industrialisation.

There is so much that we will need from them but the point that we are making is let us buy those things that we cannot produce here from South Africa and there is so much of that. But let us buy from here what we can produce locally.

TZ: A South African minister was quoted as saying that they were going to engage you over these developments. Have you already met, or should you meet soon, what is the framework within which you can discuss these issues?

MB: We always meet. We have three levels of meeting. We have a technical committee which meets periodically to discuss issues to deal with trade between South Africa and Zimbabwe. What we also have at a ministerial level, we always meet as well and we also discuss some of these issues at SADC level.

Now because of my commitment to other engagements with some of the stakeholders, I couldn’t be in Botswana for the SADC Ministers of Trade meeting but my deputy was there and came back today (Thursday) and briefed me that she did talk to the South African Minster of Trade and Industry explained what we are doing and indicated that i would actually want a one-on-one meeting with my counterpart.

I had even suggested possible dates and he in turn is also looking at the dates. So we will be meeting after the UNCTAD meeting in Kenya.

TZ: Going back to the industrialisation issue that you alluded to earlier, President Mugabe last year indicated that South Africa should be able to help other countries within the region so that they industrialise and lessen the overreliance of the region on it. One question that comes to mind is, is South Africa willing to say set up industries of their products here or within the region? Have you engaged them so they set up plants here and create employment?

MB: There are many South African companies who are operating here and are even setting up factories as I speak. So in terms of the private sector, the South Africans are just like any business person, they come when they they see an opportunity. And one of the opportunities that they’ve seen in the past year when we removed some products like cooking oil from the open import license was that they had to come and operate here and then they came and set up shop in Mutare.

So you will see a new oil company in Mutare, not only making cooking oil but also making soap and margarine as a result of this measure. Now this is the reason why we have said if we did it for the cooking oil and had positive results why can’t we replicate with other products?

TZ: In terms of the recapitalisation of industry which many people believe will fix our own industry to be able to produce, what is the role of foreign direct investment and how forthcoming has it been?

MB: FDI has not been as much as we wanted but mainly perhaps because of the negative image that has been around to a number of those countries where one would expect. But the point remains we have been doing a lot of engagement and we are seeing some of the results coming up.

We believe the work that the Minister of Finance and Reserve Bank Governor have been doing will see an opening up of lines of credit to our financial institutions. As I have said to a lot of people, it is not Government’s role to give industry money. It is the financial institutions in a given economy that must give the private sector money for them to make goods and services and payback the money.

Our financial institutions were unable partly because of sanctions, therefore, we would welcome the move that the Finance Minister has started which will allow lines of credit so that our financial institutions will be able to provide funding. However, because we can’t wait for that we have started a scheme with the reserve bank governor where we target certain critical sectors and they are provided with funding.

We have started with the fertiliser industry where $10 million is provided to resuscitating Dorowa mines and leading to Zimphos. Ordinarily Zimphos or IDC which is the mother company would have gone out to look for money but when they were about to get money, the Americans came in with their sanctions and they couldn’t get money from those financial institutions so the Reserve Bank governor is assisting us in that regard.

We still continue with DIMAF because it is a revolving fund and we also encourage private players to engage in joint ventures and PPPs. That is why government has come up with legislation to support joint ventures and give confidence to other people who might want to join us.

TZ: What do you think it will take and possibly how much, for Zimbabwe to reach the level of industrialisation that South Africa has or at least come close to enjoying parity with that country?

MB: It is very difficult for me to make that assessment. What I can say is that if we can keep our heads together and come up with the right policies, some which might be painful at first, if we look at that, our economy has all the potential to grow.

I understand fully that for a long time you had people who were into importing and I can’t blame them because there was that opportunity and the system allowed it. But we are saying that it is time to make a change. There needs to be a mindset change. But we can’t lose them or throw them away and I have been engaging the cross border traders to say there is a still a role you can play.

For example, we can give you information on those products we don’t make, we want you to important. We can also give information when there are surges of supply and demand to say there is a shortage of cooking oil and you can import. We are also saying why can’t you play a role in importing the raw materials for these producers?

To the producers we say, we are giving you support rather than you getting these raw materials directly, why can’t these people be involved. There are so many ways of carrying our cross border traders with us. One of the issues that we still need to address is that over time we have destroyed this line where you have a wholesaler, you have a retailer, you have a manufacturer.

We now have a place where some manufacturers are everything and that blocks other players and I think it’s something we should address and work with associations on this. But more importantly is that this SI will be monitored and evaluated by a committee comprising the private sector and government to be able to monitor its impact and effectiveness so that we can make changes as we go along.

We believe that these companies that have been supported must also be able to demonstrate that they have been supported. What has been the increase of employment in their efficiencies, in their distribution, in their quality to ensure that they meet the standards. And we want them to be certified by the Standards Association of Zimbabwe so that their quality is not compromised.

We don’t support industry for them to hike prices, we want to see prices going down because they are now producing more volumes. The more volumes they make the less the unit cost, so this is what we are looking at.