Locals have not shed Zim dollar pricing mentality

Since the opening up of the economy with dollarisation in 2009, concern has been raised over imports flooding the local market.
Because of events leading to dollarisation such as hyperinflation and low industrial output, imports have been inevitable. The country’s industries are still failing to produce enough to meet demand.

However, the large scale importation of goods was supposed to be a stop gap measure while the economy picked up. When dollarisation was introduced, capacity utilisation of most sectors was at 10 percent while in others it was below that.

Government came up with the Short Term Economic Recovery Programme which was supposed to raise industrial output  to about 80 percent after about  two or three years.

However, Sterp targets have not been met and industrial output remains depressed while imports continue.

Zimbabwe is now labelled a huge supermarket because of the large amount of imports that are coming through.

These imports are not doing the economy any good. If anything, scarce and vital foreign currency, which can be used to improve liquidity, is being wasted to import goods which should be manufactured here to create jobs.

The big trade deficit the country is experiencing is largely due to the mismatched imports and exports.

Certainly something needs to be done.

However, banning importation of products because someone has complained that their viability is threatened by certain imports is a piecemeal approach that will not benefit their economy.

According to a story in yesterday’s Chronicle, the Government is planning to ban imports of sugar and horticultural products such as tomatoes, potatoes and onions to protect local producers.

According to Deputy Minister of Agriculture responsible for Mechanisation and Irrigation Development Cde Davis Marapira, the ban was likely to be effected by the end of next month.

However, before effecting the ban, Government must make sure such a move will not have detrimental effects on the general public.

The public needs to be protected because there is a danger that once imports are stopped, prices will shoot up as local producers want to maximise on profits.

One positive impact of imports has been lowering of prices. Locally priced goods are generally over-priced compared to imports.

Local producers and manufacturers have not shed their Zimbabwe dollar pricing mentality.  If local goods are properly priced, there is no reason why locals should opt for imported goods.

If the ban is put into effect, will local farmers be able to meet demand? With most sectors of the economy operating at 39 percent, there is a danger that without imports, there might be shortages of some goods.

While government must protect local industry, it needs to make sure that while doing so, it also protects consumers so that they have access to affordable goods.

Government also needs to come up with a policy that promotes production of local goods while at the same time not prohibiting imports. Such a policy could involve giving tax breaks and other incentives to local producers to enable them to also export their goods.

With the 2014 budget imminent, Government needs to craft policies that augur well for the resuscitation of local industry.

Zimbabwe cannot continue to survive on imports while at the same time banning imports is a short term solution that will cause other problems in the future.