The Sunday Mail
Clemence Machadu Insight
Howdy folks!
Revelation 17:9 says, “This calls for a mind of wisdom.”
This scripture should be taken seriously, especially now, given developments in our dear motherland, some unfortunate.
I am not a political analyst, so I will attempt to restrict myself to one economic issue that has caused needless uproar — Statutory Instrument 64 of 2016.
The SI has enforced restrictions on imports of selected basic commodities.
The idea is to protect the manufacturing sector from an avalanche of cheaper imports trickling into the country so that the local industry can grow, create jobs and contribute more to the fiscus, among other reasons.
That is the big idea!
The notification of this SI by Industry and Commerce Minister Mike Bimha arises from the Control of Goods Regulations which were put in place in 1974.
Like or hate it, controlling goods in the interest of the economy has been part and parcel of us for more than four decades now.
The recently-announced SI introduces import restrictions on goods in about 15 sectors of the economy, mainly touching on manufacturing sub-sectors.
It is important to first of all dichotomise some of the views coming out from this move and reconcile them as we punctuate an understanding that should inform us about its indispensability.
First of all, “buy national” policies are regarded as non-tariff barriers (NTBs) under the Tripartite Free Trade Area framework, hence, many people might be quick to dismiss the selected import restrictions in that regard.
The same framework also cites over-valued currency, inadequate infrastructure, import licences, occupational safety and health regulations, inter alia, as NTBs.
But when you come to think of it, which country can safely eliminate all these?
Which country can do without import controls, at least?
Travellers are confused about whether or not they are no longer supposed to import the listed products even in limited quantities for their personal use.
The regulations mainly target bulk importation, and it is my view that the responsible minister should specify the actual limited quantities that individuals can now import for personal use.
It’s better to quantify than qualify, as qualifying may result in more confusion.
Some analysts think the move has contravened protocols that Zimbabwe has signed with trade blocs it is a member to, such as the World Trade Organisation and Sadc.
My former lecturer, Dr Gift Mugano, for instance, opined that: “This SI is violating Article XI of GATT which prohibits use of quantitative restrictions on imports and exports through quotas, licences and other measures.
Moreso, we are a member of Sadc where we have assented to free trade agreements.”
While this is true, there are, however, exceptions to those rules, which necessitated Zimbabwe to take this necessary measure. Article 20 of the Sadc Protocol on Trade allows for safeguards if a product is being imported in increased quantities and under such conditions as to cause or threaten to cause serious injury to the domestic industry.
Further, Article 6 of WTO provides for Provisional Safeguard Measures.
It states that, “In critical circumstances where delay would cause damage, which it would be difficult to repair, a Member may take a provisional safeguard measure pursuant to a preliminary determination that there is clear evidence that increased imports have caused or are threatening to cause injury.”
We sure can come up with tonnes and tonnes of dossiers on how proliferating imports are hurting our economy in terms of job losses, declining production, you name it.
This is why the Industrialisation Development Policy was unequivocal, stating that: “Whilst the principle of import substitution is sometimes viewed in a retrogressive manner. . . the situation in Zimbabwe demands that we rely on it to offer temporary protection for our industry to counter the surge in the disruptive imports.”
We cannot expect to have thriving industries tomorrow if we do not incubate and grow them today.
Protection does not produce immediate results, but is a sustainable way of growing the economy if implemented well.
This is why Minister Bimha said, “We are looking at how things will change in the medium to long term and not its effects today.”
What should be noted is that protection may mean relatively higher prices of local products in the short to medium term, which is a sacrifice that consumers have to make for their economy.
However, they have to be engaged well for them to understand the merits and to fully embrace it.
This is where Government did not do well.
However, there is still room to redress that anomaly.
You see, as consumers make the sacrifice of buying less for more, producers should be accountable for their actions to consumers during the protection period.
They should explain what they are going to do to make their prices decline, to make their product quality improve until it matches or surpasses international benchmarks.
Personal Care Manufacturers’ Association has attempted to do that in its statement to the effect that it has “the capacity to satisfy all local demand with world class quality and competitively-priced personal care products”.
As consumers who are now left with not much of a choice except to provide business to them, we have the moral right to audit this pledge and to further understand the strategies they have in place to make that a reality.
This is the sort of relationship that existed between vabereki and the comrades during the war of liberation, culminating in victory.
There are many sacrifices that vabereki made during that time; from cooking for the comrades, sheltering them and sharing intelligence.
Although they knew that the war was not going to end the next day, they supported the cause because they understood perfectly that it would be an ideal equilibrium for them once it came.
But it was a result of aggressive commissariat work from the comrades.
We still need that kind of economic commissariat work ethic if we are to win this economic Chimurenga.
Do not take vabereki for granted!
The ball is now in the manufacturers’ court.
Let them play their part.
By cutting down on imports, demand for local substitutes automatically rises and the initial advantage to manufacturers is that they will start to accrue economies of scale.
But Government should also ensure our borders are tightened to avoid smuggling, and introduce concrete measures to checkmate the externalisation of money generated in Zimbabwe.
Industries that have benefited from protection should also be monitored to see whether they are committing to their strategies of becoming competitive.
Those that are just abusing protection to make a killing, price-wise, should be chased away from the umbrella.
Too bad we are only beginning to realise the importance of import substitution now, when the Industrialisation Development Policy (2012-2016) is on the sunset.
The IDP was launched about five years ago when capacity utilisation was 57 percent.
Although it proposed import substitution and tariff protection as key strategies for industrialisation, we have been too lackadaisical to aggressively implement it.
It is only being realised now when capacity utilisation has sharply declined to 34 percent.
This is why the policy will not achieve its objective of increasing manufacturing capacity to 80 percent, its contribution of 30 percent to GDP and its contribution of 50 percent to exports — by end of 2016.
These times call for a mind of wisdom as opposed to burning tyres.
Later folks!
