adminNgonidzashe Chiutsi Business Correspondent
THE Government has been challenged to come up with robust and stringent policies to protect local manufacturers from unfair competition being exerted by foreign goods coming in at subsidised prices.A number of companies have closed down in the country, leaving thousands of workers jobless as they succumb to pressure from unfair competition brought by substandard and unfairly priced goods.
Consumer Council of Zimbabwe (CCZ) regional officer Mr Comfort Muchekeza said the solution to the challenge posed by imports needed Government to come up with a raft of measures to counter this “dumping” of foreign goods.
“The Government should put a policy in place that guarantees the survival of local companies so that they don’t face unfair competition. If the Botswana government is saying to their suppliers we will subsidise you, go and sell below cost, what mechanism are we also putting in place to protect a product that we really know that it’s being sold below the production cost. Are we also saying our companies should also sell below cost and if they are going to sell below cost, who is going to meet the difference,” he said at a Buy Zimbabwe conference in Bulawayo last week.
The Senior Minister of State in the President’s Office, Cde Simon Khaya Moyo, said the Government was concerned about the country’s import bill which has reached $10 billion since 2009, surpassing the national debt since 1980.
“As Government we are worried that, due to the supply challenge faced by the industry over the last decade, when the country went through a difficult economic period, the population has been forced to consume imported goods and services,” said Cde Khaya Moyo in a speech read on his behalf by the Minister Sports, Arts and Culture, Cde Andrew Langa.
He said the current trade imbalance was as a result of the growing preferences for imports at the expense of locally produced goods and services.
“Statistics indicate that between January and August of this year, we imported goods to the value of $4,1 billion against exports of 1,8 billion. This created a deficit of $2,3 billion. The cumulative deficit of $10 billion since dollarisation in 2009 has surpassed the total national debt from 1980,” said Cde Khaya Moyo.
In a sideline interview Buy Zimbabwe’s Business Development Executive Alois Burutsa said buying locally produced goods saved thousands of jobs.
“Buying locally produced goods will save jobs for thousands of qualified and unemployed people in the city of Bulawayo and also revive Bulawayo’s economic fortunes and improve lives of the populace,” said Mr Burutsa.
“We want to see companies such as United Refineries, Dunlop, Tregers, National Blankets, Arenel, Lobel’s increasing their capacity utilisation and create more jobs in Bulawayo,” said the official.
He admitted that some locally produced goods were still highly priced but prices were set to go down with time.
“Yes, currently the local prices of goods are very uncompetitive and if even you see on the exports figures. The exports are actually coming down and so far in the first half of 2014 we exported $1,5 billion as compared to $1,8 billion last year,” said the Buy Zimbabwe official.
Mr Burutsa said this was because locally produced products were not competitive because our capacity utilisation was low.
“The capacity utilisation is low because there is low demand. We are not supporting our local companies. What we need to do if we are to turn around the situation is to go through a period sacrifice. We have to sacrifice and pay that extra dollar or extra five rand for an expensive product as long as it is a Zimbabwean product,” said Mr Burutsa.
“The more we support those products, in the long run the price will come down because the capacity utilisation will increase. When the capacity utilisation increases, the unit cost will go down and obviously that will translate to lower prices. At this particular moment we have to accept those high prices,” he added.
The official said in some instances the prices of locally produced goods were coming down namely Mazoe Orange and the local cooking oil because the companies were now producing more volumes.
“Around $6 billion is being taken out of the country every year and for a country that has little Foreign Direct Investment (FDI) where last year we had only $400 million FDI compared to Mozambique which had $5,9 billion. If we could save that money, it would go a long way in solving the credit crunch since banks have no money and are not lending,” said Mr Burutsa.
During a media tour of industry last week, company executives drawn from big firms such as Lobels, Ingwebu Breweries, Pretoria Portland Cement (PPC), United Refineries Limited (URL) and Arenel, said local industry was producing sufficient quantities but demand was disappointing.
URL chief executive officer Mr Busisa Moyo said the suppressed demand was making it difficult for local firms to grow as many people still preferred imports.
In 2012 the capacity utilisation went down to 39,6 percent from 44,5 percent in 2013 due to a plethora of reasons chief among them flooding of imports in the country.
The Confederation of Zimbabwe Industries (CZI)’s Manufacturing Sector Survey 2014, recently revealed that the capacity utilisation has gone down by 3,3 percent to an average of 36,3 percent.
Buy Zimbabwe economist, Mrs Vandudzai Zirebwa, said sometimes the reason why most consumers preferred foreign goods was due to the packaging.
“Sometimes the reason why the locals prefer imported goods even when they are priced the same with local goods is because of the packaging which is not attractive,” said Mrs Zirebwa.
The economist said they were going to advise the local producers to improve their packaging.
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