The ManicaPost
Kudzanai Gerede
Following Government introduction of Statutory Instrument (SI) 64 of 2016 as an intervention tool meant to cushion locally produced goods from uneven competition of cheap imports on the domestic market, more still needs to be done to increase local content in wholesale and retail outlets as import products still dominate the market space, analysts have said.
Despite Industry lobby group, Confederation of Zimbabwe Industries (CZI) asserting that capacity utilisation in the manufacturing sector has steadily increased since the instrument came into being as a result of improved demand, analysts say only a few selected items such as cooking oil, dairy products and mealie-meal depict a certain level of local content presence in most wholesale and retail shops whilst import goods still dominate the shelves.
A snap survey by Post Business at major retail shops such as OK, TM Pick n Pay and Spar revealed that locally produced products remain below 50 percent of total products range including goods covered by SI64.
In June this year, Government through the Ministry of Industry and Commerce gazetted import controls, which saw the scrapping of about 42 selected goods from the Open General Import License such as Cremora, Camphor creams, white petroleum jellies, plastic pipes, bottled water, salad creams, canned fruits, vegetables, pizza bases, yoghurts, flavoured milk, dairy juice blends, spaghetti, macaroni, baked beans and cheese among others.
The list comprises goods Government believes local industry has the capacity to produce.
Observers say while SI64 was meant to see local product uptake improve hence promoting local industry, the import restriction does not ban the importation of the same products which has limited the intended thrust of the instrument as the local market continues to be predominantly foreign.
While Zimbabwe remains signatory to several free trade protocols with her regional counterparts, with SI64 having already attracted contention with regards to safeguarding her industry, analysts say Zimbabwe should expedite its local content regulation which despite giving market space to imports will ensure a substantial threshold of locally manufactured products on retailers’ shelves.
“Local content regulations will be welcome in trying to cover the huge gap already existing between local products and imported products on the shelves because we have to bear in mind that SI 64 did not ban importation of goods but only restricted their quantity as successful application for license to import can still render the same restricted goods on the local market like is the current case,” said Confederation of Zimbabwe Industries president Sifelani Jabangwe in an interview.
It is further noted that there has been an increase in smuggling of restricted products through the country’s highly porous border posts resulting in flooding of import products on the parallel market.
However, Mr Jabangwe conceded that despite noticing the restricted products on SI64 still dominating market spaces locally, industry still needed to be supported to fully step in and have its strong presence felt in the market as only a small line of items were restricted meaning imports were bound to dominate the market.
“We must also remember that SI 64 only covered a thin line of about 42 items out of over 1000 items that constitute our imports range so there is bound to be a degree of imbalances and like I said it’s not a ban but a restriction which still allows these goods on the market but of course we are aware of smuggling which we have discussed with the Ministry of Industry and Trade and they have assured us that they are crafting strategies to counter that one,” he said.
While calls for local content regulation continue to take centre stage other economic analysts like Dr Gift Mugano are of the view that the same attention should be rendered to the crafting of a sound local procurement regulation that will also ensure heavy industries such as the motor manufacturing and mining are obliged to a certain degree of local content supplies.
He said such an arrangement will ensure local players participate in these high tech industries despite not having capacity to produce at large scale but can have a role to play by supplying small components to big firms thereby creating value chains necessary for industrial growth.
“Local content regulations just like local procurement regulations are critical to our economy because we should also be cognisant to the fact that we also need our local footprint in some of these high tech industries which have been brought by foreign investment were despite our lack of capacity to produce locals can have a certain threshold to supply these big industries,”
“We come up with an investment policy which speaks to who is going to supply these industries so that we create strong value chains,” said Dr Mugano.
He also said Government had the onus to pave the way for local content procurement when purchasing various items particularly vehicles from local car assemblers.
In his 2016 National budget last year, Finance and Economic Planning Minister Patrick Chinamasa announced the removal of selected motor vehicles and buses imported by Government and School Development Associations from the Duty Free Certificate Facility in order to facilitate implementation of the Cabinet Circular to buy local so as to empower local motor manufacturers like Quest motors in Mutare and Harare’s Willowvale Mazda.
However, local car assemblers remain depressed despite having capacity to meet local demand citing poor uptake of their products as government continue to procure its vehicles outside the country.
