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Bernard Bwoni Correspondent
The recently gazetted regulations under Statutory Instrument 64 of 2016 to control and regulate the importation of certain goods that are available locally or can be made locally requires further debate and discussion minus any associated emotions and bias. The recent demonstrations and burning of a warehouse at the Beitbridge Border Post point to a number of key underlying and still to-be-debated issues.
The criminal damage at the border was unfortunate and potentially points to some individuals or groups of individuals who are pushing their own agendas to create the impression that the current cash crisis is a political rather than an economic problem. That is muddling issues instead of looking at it from a point of proffering long-term remedies for the country. It is true that Zimbabwe has allowed a problematic situation to exist whereby it imports more than it exports which has brought to the surface all the issues of cash shortages, unemployment and the many other related crises being witnessed. It is thus Government’s responsibility to remedy the situation through regulation of trade to create the right environment for local businesses to fill in the gap created by this ban.
There are many anchor level commercial activities that local producers and business people can enter into because they are low entry investment sectors. The goods that are on the list of the restricted categories under this statutory instrument can be made locally if not already being made locally and these are opportunities for the domestic producers and entrepreneurs.
The categorised goods include such items as wheelbarrows, lock gates, lattice masts, roofs, roofing frames, doors, windows and window frames, shutters, corrugated roofing sheets, baked beans, potato crisps, cereals, bottled water, mayonnaise, salad cream, peanut butter, jams, maheu, canned fruits and vegetables, pizza base, cheeses, ice-cream, yoghurts flavoured milks, furniture and so on. These are products that can be made locally and this creates opportunities for the local businesses.
Some have argued that the ban is an extreme measure and that Government should have imposed harsh anti-dumping tariffs or rates instead. That is without a doubt a valid point, but the counter argument is that even with such measures in place, the same products would continue to come into the country due to various reasons, mostly illegally of course, at the entry points. The import ban is a strategic move by the Government to stimulate the growth of domestic manufacturing capacity to increase exports.
Local entrepreneurs will start producing or are already producing those goods locally and eventually cheaply. If goods are being produced in Zimbabwe, this creates employment as increased production minus the imports means increased sale of the domestic product and job opportunities for Zimbabweans. It is people with jobs who have money to spend on goods and services.
This is a way of kick-starting Zimbabwe’s economic growth. The business people from Musina are up in arms against the Zimbabwe Government’s decision to ban the imports because it has serious repercussions and puts restrictions on their livelihoods. The South African producers and wholesalers have unilaterally made a claim to the Zimbabwe market as wholly theirs and will resist any entry onto the Zimbabwe market by Zimbabwe products. That is the reason why they were demonstrating on their side of the border. The Zimbabwe cross-border traders are sustaining these SA businesses, they bring in the cash and in so doing employment opportunities for South Africans. They are basically exporting employment opportunities to the South African economy. It is a fact that the cross-border traders have to sustain their livelihoods during these tough economic conditions. There is no denying that and people have to survive. It is also a fact that Government has a responsibility to come up with solutions and sometimes such solutions may be unpopular with some sections of the public.
This is a dilemma for the Government which is faced with the challenge of making decisions for the greater good of all and for the long run. It is a fact that Zimbabwe is currently facing a cash shortage and when people go to neighbouring countries with dollars or rand to purchase goods for resale back in Zimbabwe, they are in fact propping up that country’s economy.
This is basic and needs to be viewed from an economic point of view for the greater good of all and not individuals. Zimbabwe has to import the USD or Rand under the current multi-currency regime. When people buy goods produced in South Africa for example, they are boosting sales for South African businesses and increased sales for these businesses means more employment opportunities for them and not for Zimbabwe. This is the reason why South African business people are protesting as well on their side of the border against Statutory Instrument 64 of 2016.
There is an urgent need to kick-start the Zimbabwe economy and an import substitution industrialisation strategy is a good starting point. This is not re-inventing the wheel as all the developed countries and emerging economies of today have had to do that to get to where they are today.
The same argument from most people is that Zimbabwe does not have an industry to protect and as such the import ban is ill-conceived. The counter argument, however, is that for Zimbabwe to have an industry to protect, whatever is there or was there requires time, promotion and protection to build capacity to be able to compete against products from outside.
There is the argument that the timing of the ban is insensitive.
However, the other argument is when is the right time? The Zimbabwe manufacturing sector is being choked by these cheap imports the government has just banned. The local manufacturers are struggling because a huge chunk of the local revenue is being lost to these cheap and in most cases inessential industrial and agricultural imports which can be made, produced and accessed locally.
Zimbabwe is basically exporting foreign currency and employment to other economies through this over-reliance on imports. Formal employment is not being created. The economy is heavily burdened by these imports and it is struggling to grow. Where in this world has economic growth has come from importing?
The value of producing wealth is in fact more important than the wealth itself because of the long-term implications. Imports may create a profit for the individual but the long term impact on the country’s manufacturing sector is dire. The argument being put forward by those who are against the import ban that locally produced goods are more expensive than the imports is very correct.
It is a fact that initially protectionism can make the price of goods more expensive. However, with time as the country builds its capacity, the goods will be produced more cheaply locally. These are the long-run realities of protectionism. The import ban may appear insensitive but in reality it is not anti-people. The Zimbabwe Government is responding to the situation and looking at fostering a local economy where wealth creation improves the economic and social fortunes of the majority. This is about an economy that focuses on all and not just certain individuals. It is not always going to be possible to have it both ways.
Governments have the responsibility to make bold and sometimes unpopular decisions for the greater good of the majority. Businesses and factories are struggling in Zimbabwe owing to intense competition from these cheap imports.
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