The ManicaPost
Kudzanai Gerede Business Correspondent
Government decision to relax import controls on basic commodities under Statutory Instrument 64 (now consolidated to SI 22 of 2017) to allow organisations with free funds to import and ensure adequate supplies on the market ahead of the festive season opens a window for a reality check on local industry utilisation of the instrument, one year on.
Last year, Government introduced import restrictions on selected goods as a buffer for local firms against unfair competition from cheap imports that had flooded the domestic market. Major gains have been recorded since then, with a number of foreign companies opting to set up plants to produce locally notably South African giant manufacturer, Willowton Industries in Harare and Mutare and soon to be commissioned global beverage concern Pepsi in Harare among others.
However, the local manufacturing sector has fallen on hard times as foreign currency shortages for procurement of raw materials is shoving the country’s manufacturing firms on the edge. The latest Confederation of Zimbabwe Industries (CZI) manufacturing sector survey 2017 stated that 30 percent of firms in the sector are on the brink of collapse owing to foreign currency shortages.
Capacity utilisation fell to 45,1 percent in 2017 from 47,4 percent recorded last year and despite an increase in total production output, what this implies is – local firms have enjoyed improved market share for their products thanks to SI 64 but have failed to invest in improved capacity utilisation resulting in a 15 percent job loss across the sector as compared to prior year.
However, with Industry and Commerce Minister Dr Mike Bimha having clarified the decision to relax import controls as a temporary measure to ensure availability of goods during the festive season, there is growing anxiety within industry of its unpreparedness to compete with imported products on the domestic market. Already exports from the sector have dwindled from 25 percent in 2013 to current levels of less than 15 percent.
“Yes our local industry needs more time. We are not yet ready for opening the flood gates to imported goods in the market. Industrialists have always known that SI 64 was not permanent but as for now we still need protection,” CZI Manicaland chairman Richard Chiwandire said.
“We are aware it’s temporary (relaxing import controls). It is good for the consumers as we expect this is going to address the supply of commodities,” he added.
Consumers have, however, welcomed the development as a right step towards arresting unjustified rising inflation on basic food stuffs which had became rampant in the last few weeks. Retailers Association of Zimbabwe chairman, Denford Mutashu last month threatened manufacturers they would soon push for importation of goods from outside the country if they continued to inflate prices unjustifiably.
