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Imports for cooking oil and dairy products decreased by between 33 percent and 48 percent in the six months to June compared to the same period last year following the introduction of duty on the products by Government
In a paper titled “Ring-fencing imports: Implications for industry, the economy and drive towards regional integration”, the Zimbabwe Economic Policy Analysis and Research Unit executive director Dr Gibson Chigumira also said import duty has been declining following removal of duties in compliance with commitments made under RI Arrangements (SADC and COMESA).
Dr Chigumira was addressing a Sweden-Zimbabwe Private Sector Collaboration Programme’s Zimbabwe Trade Policy Training yesterday.
Dr Chigumira said players in the oil pressing industry have witnessed a growth in business and improved levels of capacity utilisation.
He said import licensing (non-tariff barrier) in addition to tariffs introduces other distortions, such as, bureaucratic delays; increase cost of doing business; raise enforceability issues; and rent seeking behaviour; unintended effects of policy intervention, make it difficult to import into the country.
“Examples from the cooking oil and dairy industries can be useful in showing the effect of duty.
“In the dairy industry, imports for the products identified for protection decreased by about 32,6 percent during the first six months of 2014 compared to the same period in 2013,” said Dr Chigumira.
“During the first six months of 2014, imports for the products in the cooking oil industries, where duty was imposed decreased by about 47,5 percent compared to their levels during the same period in 2013,” he said.
Dr Chigumira said firms exporting into the country are generally prepared to continue to trade with Zimbabwe despite the duty levels but the biggest concern for industry is the import restrictions that have been introduced, which are generally a non-tariff barrier.
“Import permits appear to have caused some distortions in the market and (there are) concerns on the bureaucratic process to obtain permits.
“Imposed restrictions appear to favour certain groups of industry players at the expense of the other. The success of Zim-Asset requires industry to fire on all cylinders/sectors,” said Dr Chigumira.
He added that policy reversal affect policy certainty, consistency and credibility, hence the need for thorough research on possible impacts and migratory measures before pushing for a particular policy intervention.
A tariff restricts imports by increasing cost of landing the product in the local market. For instance, Dr Chigumira said, Statutory Instrument 126 imposed restrictions on plastic bags of polymers and tubes, pipes, conveyor belts and rubber hoses (among others).
However, cement manufacturers need polypropylene cement bags and conveyor belts for their operations.
“Local bag manufacturers (Grain Bag and Nat Pak) lack the equipment needed to migrate from the traditional high cost valve bags to globally adopted block bottom bags which are low cost.
“Local cement companies thus still need to import the bags which are not locally available if they are to compete at the international level,” said Dr Chigumira, adding; “Difficulties or bureaucratic delays in getting import permits adversely affect production cycles”.
“Local suppliers confirmed that they do not have the capacity to meet the requirements of the local manufacturers and denied ever lobbying for protection,” he said.
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