Has Zim turned into a shelf economy?

create retail space.
Unsurprisingly, most of the now exclusively furnished clothing shops, from subdivided former office buildings, are stocked with imports.
Ideally, opening up the economy tallies with the new thrust towards globalisation and brings variety that is healthy for competition.
But the influx of imported goods has turned Zimbabwe into a shelf economy and dumping ground for cheap quality imported products.
Last year, Zimbabwe imported almost U$8,5 billion worth of goods while exporting only US$3,6 billion, which saw the trade deficit widening to US$5 billion from US$2,2 billion the prior year.
The net effect of this is that it has weighed heavily on a fragile local industry that is  recovering from the effects of a decade of economic instability.
While the economy recovers steadily in terms of Gross Domestic Product growth,  companies remain strangled in their bid to secure affordable funding to replace old and inefficient machinery.
It means local industry will continue to play second fiddle to imported goods for a long time, in what will also stunt the marginal economic growth.
The fact that the majority of goods consumed in Zimbabwe are being imported from South Africa means the country is exporting employment.
And the unfortunate scenario seems to be aided by policy inconsistency. For instance,  Finance Minister Tendai Biti recently proposed to slash duty on imported textiles after an outcry from cross-border traders.
But he had moved to hike the import tariffs in a bid to protect local industry, especially clothing and textiles, which faces collapse due to stiff competition from low-priced imported products.
Presenting his US$4 billion 2012 National Budget Statement, Minister Biti retained duty on selected imported goods as well as increasing to 40 percent +US$3 (per kg) duty on textile and clothing goods up from 40 percent +US$1.
But the clothing industry’s NEC secretary- general, Mr Justice Mashinti, early this year said the move was not welcome at this point and could precipitate the closure of more firms in the clothing and textiles sector.
He said that Minister Biti had hiked duty after strong lobbying from textile and clothing manufacturers to minimise external competition, which is still prevalent hence the need to maintain duty on imports.
He added that the industry was under threat and firms were downsizing. Employee head count, at 25 000 before 2009, is now               6 000. “When the minister took the decision to increase duty, it was after we lobbied him strongly. Notwithstanding concerns from others we feel we still need to be protected from cheap imports. The factors are still there (to warrant protectionism),” he said.
However, imports from as far afield as China, Dubai and South Africa continue to flood local shops as is there no import duty in place. Consequently, local firms have failed to register significant growth and shake off the hangover effect of problems from the last decade, which will continue to deprive locals of any new jobs.
The country is estimated to have 80 percent of its economically active population not formally employed despite the economy growing for three consecutive years.
While self-employment helps in reducing the problems spawned by unemployment having a significant number of the economically active population in formal jobs helps stimulate demand.
According to economists, low disposable incomes and high levels of unemployment have combined to result in low demand for products. These challenges are faced in almost the entire industrial sector, which requires about US$2,5 billion dollars to recapitalise and replace equipment.
Access to affordable funding will also be key to enhancing quality of local products. This also affects the cost of the products.
Due to the high cost of Zimbabwean products, locals continue shunning locally produced products for imports.
But delays in addressing the challenges facing industry creates a nexus that results in a vicious cycle that eventually affects other sectors with synergistic linkages to the sector, such as agriculture. The problem of funding is worsened by the fact that the little is made available for distressed and marginalised areas and most of the funds have remained largely locked up in banks instead of benefiting companies.
But Zimbabwe’s problem in stimulating productivity remains multi-faceted without little deliberate and helpful strategies to eliminate challenges.
It must be admitted that while variety is healthy for competition, local industry remains fragile to compete with production efficiencies of firms in countries from which Zimbabwe is importing.
For instance, despite having access to low- cost funding and state-of-the-art technology,  South African vehicle manufacturers receive a 40 percent rebate from Government under the Motor Industry Development Programme for every vehicle they export.
And at the same time the South African government enacted legislation that compels 75 percent procurement from local companies.
All this is part of deliberate protectionism to enable growth of local industry, which in a way helps maintain and create employment.