Harder times ahead

via Harder times ahead – DailyNews Live 14 September 2014 by John Kachembere

HARARE – Crisis-weary Zimbabweans should brace themselves for excessive price hikes and food shortages in the coming months following government’s increase of duty on a number of basic food commodities.

Economic analysts say a raft of taxes introduced by Finance minister Patrick Chinamasa in the absence of donor support and foreign investment, in an economy that has been in free-fall for the past few months will help impoverish further the majority of citizens.

Faced with dwindling revenue streams, Chinamasa on Thursday announced a five percent increase in mobile phone airtime and a 25 percent import duty on mobile phone handsets.

The Zimbabwean government, which is facing a revenue crisis so severe it has been forced to stagger civil servants’ pay days as businesses have closed and a slump in foreign investment, also raised excise duty on petrol from 25 cents to 30 cents a litre.

In his mid-term fiscal policy, Chinamasa increased duty on a wide range of imports of finished products, including cooking oil, poultry, soap, maize meal, flour, beverages, dairy produce, furniture, sugar, fresh and canned fruits and vegetables, among others, saying they were accelerating collapse of the local industry and unnecessarily ballooning the country’s import bill which stood at $3 billion in the first six months of 2014.

Economists, however, questioned the Zanu PF-led government’s wisdom in raising import duty on basic commodities at a time when the country’s manufacturing industry is operating below 40 percent.

“The increase in import duty is supposed to direct Zimbabweans to buy local products, but these are not available in shops,” said economist John Robertson.

“As such there would be food shortages and subsequent price increases because at the moment manufacturers are waiting for farmers to produce, while farmers are waiting to get title deeds from government for them to borrow,” he said.

Zimbabwe — led by veteran nationalist leader President Robert Mugabe since 1980 — is going through an economic squeeze which is making life unbearable for citizens, with debilitating effects on industry and commerce.

Despite adopting a multiple currency system in 2009 that helped halt a decade long economic meltdown, the country is also battling to balance between reviving the manufacturing industry — brought to its knees by an influx of imported goods, ageing equipment and clogged external lines of credit — and protecting citizens from high prices.

Tax expert Tendai Mavima this week noted that while the increase of duty on finished products would raise government revenues, it would not be adequate to protect local industry.

“If the purpose is to raise revenue for government then it will be successful but if they want to promote local production, they have to introduce incentives for local industry,” he said.

Mavima said Chinamasa should have put in place measures such as tax incentives and suspension of duty on the importation of vital machinery used by industry in producing local goods.

He added that increasing duty on finished goods would have the adverse effect of increasing the price of goods, further eroding the disposable income of consumers.

Mavima said government should have looked at other variables that make the local industry uncompetitive such as the high cost of labour and electricity.

“The high utility costs will make it impossible for local industry to sell their products at competitive prices. If government subsidises utility costs for local industry, it will benefit them,” he said.

Christopher Mugaga, head of research at Econometer Global Capital said the latest move by government were acts of desperation which will not achieve intended results.

“These are just spruce-up measures because the situation is so bad. It’s too late for such interventions work,” he said.

COMMENTS

WORDPRESS: 17
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    You voted for this in 1980….!anyway tendai MAvima is absolutely correct spot on.

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    John Thomas 8 years ago

    They will do anything except cut government expenditure.

    The ZANU government is a leech sucking the lifeblood out of the country

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      Jono Austin 8 years ago

      …’encourage to buy local’, ‘raise Government revenue’ The problem is mismanagement and corruption. Government revenue should be used for infrastructure, not Swiss bank accounts or a bloated inefficient civil service and expensive jaunts to Singapore hospitals with massive accompanying retinues. The country has too long been used as a personal piggy bank by ‘he who must be obeyed’ and his acolytes. The tragedy of Zimbabwe is not so much its ‘leadership’ but its stupid populace who believe the lies.

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    Roving Eagle 8 years ago

    In the United States the Democrats and Republicans have steady different economic philosophies (left and right) has they put it. Change of governments from Democrats to Republicans back and forth means the country gets doses of opposed economic policies, is balanced and prospers. If one party were to stay in power too long controlling both houses and the presidency, the country would have an overdose of a single economic philosophy and falter. That in a nutshell explains the lack of wisdom of zpf. Having zpf in power forever controlling everything is never going to do Zimbabwe any good. Its being extremely selfish and stupid to be in power controlling everything for over three decades and wanting to continue to hold on to power even in the evidence of predictable economy decay caused by that overstay.

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      If Zanu pf had run the country properly and we had prosperity equal rights with no colour or tribe and negative connotation and the obvious conclusion would be the voters would voted for them. Zanu pf is the party that seriously needed renewal. You have people like Made who has fail year after year and he get recycled year after year. They fail to even learn from their mistakes.Unfortunately corruption is now ingrained in Zanu’s DNA so even renewal would be futile.

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        ZPF do not understand that they are only digging their pit deeper and darker. The Lord Himself warned that we do no even see when it is a time of judgment. The economy woes are a judgment from Almighy God. There is a strong precedent for this all through the word of God. Nations prosper when they obey and honour God. We are a sinful nation with blood and greed, hatred and bitterness on our hands. We are an unrepentant nation. As soon as the results came out for the July 2013 elections I discerned that economic judgment will fall and it has. And that will not be the only judgment believe me. The church needs to wake up and repent and pray to break this cycle of evil.

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    Really they don’t care!Funny thing is I think they are speeding up the collapse of Zimbabwe which maybe isn’t a bad thing indeed!Here we go or should I say come!Desperate times ahead!!

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    Panda moyo 8 years ago

    A party of starvation leading its people back to 2008.the question this time is wil the opposition form anothr gnu or will they let eveything collapse then go it alone.i heard chinamasa cried for this portfolio and does not want to relinquish it even if he doesnt know what he is doing.

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    Mlimo 8 years ago

    Collapse soon please

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    munzwa 8 years ago

    sure its coming… soon we will have the “queen” telling us to eat cake!!!

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    I am not the one 8 years ago

    ha ha ha pathetic country. Now u have the Dr of Stupidity and the Dr of Greed.

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    John Austin is right. The measures announced by Chinamasa would only work if the increased revenues accruing to the fiscus are used properly. Unfortunately this Government fails disimally when it comes to fiscal discipline. The revenues will be frittered away to pay for self entichment projects. We will never it right for as long as the culture of entitlement is so dominant.

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    In Deuteronomy there are godly laws governing everything. Zimbabwe and ZPF are far off this. for example in Deuteronomy 17:14 on, governing kings and heads are told that they shall NOT multiply horses for himself nor gold and silver?? Leaders are told to fear God and observe all the words of His law. In Ch 16:18 onwards he speaks that justice shall not be perverted. And no bribes as bribes twist the words of righteousness. God gives nations the choice between curses and blessing. ZPf have chosen the curses and many along with them. Even some churches have fallen by the wayside. A blessed nation lends to many nations and does NOT borrow??? The fruit of the land is blessed. ZPf have the curse of Edom on them. Edom was cursed because of their violence against their brothers. ZPF have done this to all sectors of Zim society: the ndebeles, the whites, the aliens, people of other political persuasions, the poor and so on. Judgment WILL come. It will be better to repent!

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    tax the people to pay for zanu theft.

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      The frightening and sad thing is that they probably think they are doing a good job!!! Because their bank balances are looking healthy!!! Stupid f***ks!!

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    Thanx NBS u could have added Deut 49 v 16.Those who he ears to hear let them hear Ndatenda hang vanhu vaMwari

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    muNdau 8 years ago

    havana tsitsi wo sei sevanhu