Zim forced to backtrack on import restrictions

Source: Zim forced to backtrack on import restrictions – The Zimbabwe Independent June 21, 2016

ZIMBABWE’S new import restrictions have sparked a furore, with protestations by importers and traders over the banning of imports of synthetic hair products, salad creams, building material, other foodstuffs and toiletries forcing the revenue authority to suspend the new measures.

The high volumes of imports – most of them from South Africa, Zambia and Botswana – have been occasioned by a struggling and poorly capacitated local industry. South Africa accounts for most imports into Zimbabwe, with the continent’s third-largest economy being the source market of about US$798m worth of goods imported into Zimbabwe in the last five months.

The government, sources say, is also now set to descend on regional retailers such as Pick n Pay, Choppies and Spar which have operations in Zimbabwe in a bid to force them to pick their stock from local suppliers.

“The industry ministry is preparing instruments to push retailers to procure stock from the local market,” said a source.

However, there could be problems with this as industry capacity utilisation in Zimbabwe has sagged to below 40%. OK Zimbabwe said recently that it is procuring most of its retail supplies for the Zimbabwe market from South Africa.

The Zimbabwe Revenue Authority (Zimra) has reportedly now been forced to shelve the ban on imports. The authority has restored the previous dispensation, where it levies a 40% import duty on most goods and commodities.

“The regional manager told travellers that they could revert to the normal situation where they paid 40% duty for their items rather than the provisions of the new statutory instrument.

“As of now, the implementation of the new regulations is suspended pending consultations between Zimra, the Ministry of Industry and Commerce and other stakeholders,” the state-run Herald newspaper quoted a Zimra official as saying on Tuesday.

Although traders and importers have castigated the new import measures, the Buy Zimbabwe pressure and lobby group for the consumption of local products welcomed the restrictions.

“This timely intervention comes at a time when the country is suffering from the debilitating effects of an unsustainable import bill.

“While this characterisation of our economic state of affairs may seem a bit stretched and even a little harsh to our country, on closer examination it feels very close to what has been going on over the past five years,” said Kipson Gundani, an economist with Buy Zimbabwe.

He added that Zimbabwe’s “import bill remains very high and unsustainable, averaging US$7bn annually since 2011”.

Other experts said the net importer status of Zimbabwe is worsening cash shortages in the country. Banks are expected to start issuing rands, euros and Chinese yuan in a bid to ease the high demand for US dollars in the country.

New figures released by Zimstats show that Zimbabwe’s imports for the five-month period to May declined by 12% to US$2.07bn compared to the same period last year. However, imports surged on a month-on-month basis from $356.4m in April 2016 to US$413.6m last month.-Fin24