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Capacity utilisation in the milling industry has risen from 40 percent last year to 100 percent.
As a result the sector is upbeat about its prospects. The situation in the horticultural sector is similarly buoyant. The positive situation in both sections of the economy is because of government’s recent ban on maize meal, fresh fruit and vegetable imports. Government was able to enforce the maize import ban in the wake of the bumper harvest we achieved this season. Therefore, milling plants that went off during the hyper-inflationary era when duty on food imports was removed, enabling individuals and companies to import, are running again. Horticultural farmers now have a local market for their produce.
As this happens, the continued, if not rising, flow of foreign clothing and textile products means local manufacturing remains depressed.
Only a policy shift, with no expensive retooling or new capital injection, has overnight, got horticultural producers and millers back to work. Our textile sector can return to work as well if a ban was implemented on imports.
Zimra commissioner-general Gershem Pasi told a parliamentary committee on Monday that clothing retailers imported clothes worth $2 million in the first quarter of this year. He singled out Edgars, Topics, TM Supermarkets, Truworths and Greatermans as having imported finished clothes instead of raw fabric to manufacture textile products.
“The local industry itself is actually importing finished products,” said Pasi. “It means that there is no employment creation in their factories . . . it means that the factories are closed. The fact that we are putting prohibitive duties on the clothes to protect something that is non-existent would we not be better off if we open up and allow people to import freely and declare and we get some duty rather than having people smuggling?”
His rebuke on industry for undermining itself is deserved, not his suggestion to allow free imports that attract duty, whatever level it is pegged at. A revenue collector would typically give the latter opinion; his job is to collect tax whether it is levied on local or foreign products. But government has to think more broadly.
Local fruits, vegetables and horticultural produce have bounced back on the market not because producers have suddenly harvested enough. They have always done, but retailers went for cheaper imports. Because of the import ban, jobs have been protected, new ones created and our import bill substantially reduced.
We urge government to totally ban textile and clothing imports to give a new and necessary impetus to our local industry. It has worked in the food sector; it should work with garments, we believe.
Our apparel sector has effectively collapsed as clothing items from China, Kenya, Mauritius, Indonesia and South Africa have taken over. It is correct to point out that we are collectively to blame as a country for killing our own industry, firstly because of our appetite for anything foreign and secondly official failure to protect local industry by totally banning textile imports.
Local clothing manufacturers employed 35,000 people around 1996. Now they employ only 6,800, due to various challenges including excessive imports of clothing and lack of access to affordable capital and investment. Manufacturers say Zimbabwe imports $300 million worth of clothing and fabric per year but the bulk of it is not subjected to import tax due to poor policing of border posts and smuggling.
The economy is losing $120 million in potential revenue annually as a result. Our clothing import bill contributes to the huge trade deficit, estimated at $4,19 billion last year.
An industry official told the parliamentary committee on industry and commerce recently, that the sector can return to normal business if duty on raw materials and spare parts was reduced to at least 10 percent. This has to go with a corresponding increase in duty on imported ready-made garments to about 65 percent. The industry does not propose a complete ban on imports, as their presentation to parliament on 65 percent duty on finished products shows.
Sixty five percent is a high import duty which can potentially discourage imports. However, we argue that it is inadequate to stamp out the influx of foreign textiles and clothing items. It is a window for the products to be on our market. The challenge then would be to identify which of the imports have paid duty and which have been smuggled. It is possible to track the imports from source abroad, to the border to check if the duty that must be paid was indeed paid or not but that takes time and resources.
The best that we can do, if our economic recovery efforts are to succeed, is to completely ban textile and clothing items imports. A ban means that if Zimra in its investigations, comes across a foreign garment in a shop, the shop owner must immediately explain how a banned item found itself on his shelves.
Online Reporter