Industry happy with import restrictions

25 Dec, 2016 - 00:12 0 Views
Industry happy with import restrictions

The Sunday Mail

Livingstone Marufu Business Reporter —
THE local industry has expressed satisfaction with the extension of the Statutory Instrument 64 of 2016 (SI64 of 2016) to cover some products that were initially excluded in July this year when the law was put into effect.

This comes after Government has proposed to include wheat flour and school uniforms from the open general import licence.

Grain Millers Association of Zimbabwe (GMAZ) chairman Mr Tafadzwa Musarara told The Sunday Mail Business that the move will spur production in the milling industry.

“GMAZ, the apex representative body of the grain milling industry, is grateful to Government for accommodating its submissions in the 2017 National Budget Statement.

“We welcome the removal of imported wheat flour from (the) open general licence. This makes it next to impossible for wheat flour imports to continue.

“Bakers who had already resorted to using 100 percent local wheat, notably Bakers Inn and Proton, have been able to obtain more than adequate local flour, produce high quality bread on the market at the same price with those bakers who had been importing flour,” said Mr Musarara.

Following the wheat flour import restrictions, it is now expected that wheat contract support hectarage would increase tremendously next year.

Proton and Bakers Inn are buying most of their wheat from local farmers while the Lobels is understood to be relying on imports.

Government will soon extend SI64 of 2016 to other products following the success of the measures in various industries such as cooking oil.

SI64, which restricts the importation of over 40 products, was introduced in July to spur domestic production capacity.

Capacity utilisation in the manufacturing sector has since risen to 47,4 percent in 2016 from 34,3 percent in 2015 with some companies now operating at full capacity as the positive impact of SI64 begin to kick in.

The Confederation of Zimbabwe Industries Manufacturing Sector survey 2016 released last month shows that about 8 percent of respondents were operating at 100 percent capacity as the business environment continues to improve.

Presenting the 2017 National Budget, Finance Minister Patrick Chinamasa said: “With regards to evening the playing field, initial results from an evaluation of the impact of SI64 indicates gains in capacity utilisation across such sub-sectors as milling and baking; food, fruits and vegetables processing; iron and steel making; battery manufacturing; packaging; pharmaceuticals; and furniture manufacturing, among others.

“Government continues to monitor impact of this instrument on investment into re-equipping, increased production and creation of employment.

“This should also benefit from Government initiatives in support of the promotion of value chains, especially those linkages between agriculture and the manufacturing sector.”

Notable linkages are accruing under the recently promoted cotton to clothing, beef to leather and agro-processing value chains.

However, Zimbabwe National Chamber of Commerce president Mr Davison Norupiri said though the removal of flour on the general import licence is important there was need to closely monitor shortages.

“It’s a good move (to add flour on SI64) but we have to ensure that we have adequate wheat supplies to avoid possible shortages.

“As we add more goods on SI64, we should be very careful to see if the local industry has the capacity to service the respect sectors,” said Mr Norupiri.

Nonetheless, Mr Norupiri said the removal of school uniforms on the general open import licence should have been done long back as value added products like them create more jobs in the country.

Economist Mr Persistence Gwanyanya said while reducing the country’s imports is a noble idea, economic rebalancing is a two-way street that should take into account both the demand and supply side of the economy.

“Reducing demand for imports is not enough if the local production cannot step up to the plate to cover the gap left by reduction in imports.

“The supply side of the economy is severely constrained by antiquated machinery, obsolete technology, infrastructure bottlenecks, inefficient utilities and funding challenges.

“There is need to address these issues and boost production and exports, lest the restrictions will affect the welfare of ordinary citizens,” he said.

Government has called for a deliberate move towards increasing production beginning next year.

The RBZ has come up with an export incentive scheme for companies and individuals, whereby small-scale exporters get 5 percent while large-scale exporters get 2 percent of the total value of their exports in bond notes.

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