adminover the past 10 years although some commentators have questioned whether local industry has the capacity to meet demand without triggering price increases.
Finance Minister Tendai Biti re-introduced import duties ranging between 10 to 25 percent on basic foodstuffs like maize-meal and cooking oil and other commodities like potato chips, baked beans and mixed fruit jam. Salt and rice were however, spared from the import duties.
The duty would be implemented beginning August for maize-meal and cooking oil while for other commodities it will come into effect in September.
Mr Oswell Binha of the Zimbabwe National Chamber of Commerce said the re-introduction of duty, was necessary for economic growth.
“Re-instatement of duty on selected food stuffs as stated in the budget is to cushion industry from the competition posed by the influx of foreign commodities. This is in line with our recommendation that duty re-instatement be done on a case by case basis,” he said
Mr Binha said prices would only rise based on the prevailing inflation rate but said the policy was not a blanket measure on all commodities.
“Prices will inevitably increase at the prevailing inflation rate, the question is to what extent will this compound the increase in the level of prices? Yes, prices are likely to increase given the absence of adequate productive capacities. However, the policy review took note of this by not imposing blanket protection. A knee-jerk reaction to productive capacity gradual increase is expected hence the eventual stabilisation going forward. The country has made a decision between production-related concerns we raised from which jobs are created and industry start to come back,” Mr Binha said.
He, however, said the long-term solution was to ensure adequate capacity utilisation through capital inflows.
He said some sectors in food processing and beverages had capacity utilisation of over 50 percent and would cope with the changes.
Economic analyst Mr Takunda Mugaga said the domestic economy needs protection from foreign imports after a decade of decline.
“Because of the decline Zimbabwe’s economy can be treated as an infant economy at the moment. Businesses are just picking up after the decline therefore, they need to be protected. The move by the minister will also widen the tax base and increase revenues to the country.
“He talked of a 9,3 percent economic growth and that is only achievable if local industry is protected,” he said.
Mr Mugaga denied that the increase would lead to price increases saying most commodities were already over-priced as compared to other countries in the region.
“Most commodities are already overpriced mainly because of the issue of change so I do not think that will be an issue,” he said.
Affirmative Action Group secretary general Mr Tafadzwa Musarara welcomed the re-introduction of import duty on food stuffs saying a number of indigenous companies had already folded because of the competition from foreign products.
“A number of companies especially in the milling industry have already folded so the development is most welcome. There is no way local industry will grow if we do not protect it,” he said.
Mr Musarara also welcomed the removal of duty on raw material, saying this would result in the reduction in cost of production. He, however, warned retailers from unjustifiably increasing prices.
Consumer Council of Zimbabwe executive director, Ms Rosemary Siyachitema however, opposed the re-introduction of import duty saying this will further hurt ordinary citizens.
“We are disappointed with what came out of the review. We had recommended that the period be extended by another six months because local industry has not demonstrated that that they are able to fully supply consumers.
“While there have been improvement in the supply of locally manufactured goods it is not to the level to meet demand. This will result in price increases,” she said.
Ms Siyachitema said while support to industry was commendable, experiences in the past had shown that industry had failed to take advantage of such initiatives.
“There have been a number of initiatives for industry in the past but we have not seen any tangible benefits,” she said. “Even if you look at the uptake of loans from banks and other Government supported initiatives the responses have been disappointing,” Ms Siyachitema said.
Last week RBZ Governor Dr Gideon Gono said out of the US$1,5 billion that had been mobilised from foreign institutions approximately US$600 million had been leant to industry. He said this was because most companies were not providing viable projects that could be assisted.
At the end of 2010 the manufacturing sector was operating at 43 percent although there had been marginal improvements this year.
Minister Biti introduced a US$40 million Distressed and Marginalised Areas Fund for industry in his review statement.
“We think the removal of the duties should have been gradual while we monitored the responses of the industry,” Ms Siyachitema said.
The CCZ boss also mourned the lack of clarity on issues related to utilities saying the cost of water and electricity was beyond the reach of many and Government needed to come up with clear policy issues on the matter.
“Minister Biti has not yet come up with clear and practical policy detail on the issue of bills. Most consumers are failing to pay their bills and we thought the minister would give policy direction on the matter,” she said.
Zimbabwe Federation of Trade Unions president Mr Jacob Gwavava welcomed the move to protect local industry.
“We believe that local industry should be supported because there is no way we can grow if we continue to rely on imports.
“While there might some problems here and there ultimately it is important that we create conditions that allow industry to grow and create employment in the process,” he said.
He however, said Minister Biti should prioritise support to the textile and leather industries that have been hard hit by cheap imports coming mainly from Asia.
Zimbabwe Congress of Trade Unions secretary general, Mr Wellington Chibebe said he could not comment because his organisation was not consulted in the formulation of the review statement.
Online Reporter