Matches imports drain US$5,4m in three years

Senior Business Reporter
ZIMBABWE has over the past three years spent an estimated US$5,4 million importing safety matches largely due to the collapse of firms that used to produce the product, a Confederation of Zimbabwe Industries (CZI) study reveals.

Based on CZI Zimbabwe Industry Analysis, Trends and Insights — Safety Matches Manufacturing research and analysis report, the population that uses safety matches in urban areas has increased over the years due to load shedding as well as the growing use of liquified petroleum gas as a substitute.

This renders the safety match value chain one of the most important value chains in the economy, the study noted.

The report states that the country used to have a thriving matches business citing Lion Matches as once a well-known brand across the whole country, which was generally large enough to absorb domestic demand.
However, the business was severely affected by the hyperinflation era and it closed operations in 2009.

“The company failed to resume operations even under dollarisation, as import competition became intense. We are, therefore, looking at a loss of manufacturing capacity and self-sufficiency in the matches production,” said CZI.

“Since the closure of Lion Matches in 2009, safety matches imports started to increase drastically.”
To bridge the demand gap, the country has relied on imports whose dependence threatens rapid economic transformation and resuscitation of the manufacturing sector.

“Over the past three years, Zimbabwe used about US$5,4 million on importing finished safety matches.
“Relying on imports at a time when demand for the product is assured is against the general thrust of the National Development Strategy 1 (NDS1), which seeks to provide measures for ‘Moving the Economy up the Value Chain and Structural Transformation’ as a pillar towards attaining Vision 2030,” said CZI.

The report said the resuscitation of the safety matches industry will support import substitution initiative, enhance job creation and utilise idle capacity in the manufacturing sector, increase tax revenue and foreign currency earnings when safety matches are exported as well as reduction of demand for foreign currency.

CZI said given that there is no pronounced local production of safety matches, most raw materials have to be imported as there is no local market for local producers to emerge.

Although there are many raw materials that are used to manufacture safety matches, about 70 percent of the total production is accounted for by only three raw materials, namely match splints, skillets and blue-board.

“This generally means that the ability to localise these three main raw materials would be a key determinant of the ability to produce safety matches locally rather than relying on imports.

“This means that if Zimbabwe localises these three raw materials, the country will increase production of safety matches, while also creating jobs, saving foreign currency and as well resuscitating idle capacity in the manufacturing sector,” reads the report.

“While it might be difficult to wholly localise the production of the raw materials, it is possible to at least limit the import content in the three main raw materials. Zimbabwe imports match splints, despite these being purely timber products. Thus, local production of match splints can see the localisation of 35 percent of the total costs.”

The report said in the absence of incentives for local production, given that even raw materials are also mainly imported, the industry might struggle to resuscitate.

It said import duty as a mechanism to make local production attractive relative to importing finished products can be used to revive the industry.

In order to resuscitate value chain, promote local production and economic growth, CZI has recommended the creation of policy incentives for local production, including investment and tax incentives for the re-emergence of the safety matches value chain.

The industry body has further recommended the removal of duty on all the main raw materials that are used in the production of safety matches.

“This would give local producers some competitive edge over import competition. However, once the industry has emerged, duty on those raw materials that can be localised, such as match splints, would need to be increased so that local production of the raw materials is promoted,” it said.