The battle to keep imports in check

Darlington Musarurwa and Livingstone Marufu
GOVERNMENT is grappling to keep the local insatiable appetite for imported products in check, with official statistics for July — the period when Statutory Instrument 64 of 2016 became effective — show that imports rose by more than US$7 million.

The Zimbabwe National Statistics Agency’s figures indicate that July imports rose to US$176 million from US$169 million in June.

The July import bill was the second highest of 2016 after the US$177 million spent in May as the influx of sundry items such as bubblegum and skincare products continues.

SI 64 of 2016 removed more than 42 products from the Open General Import Licence, which effectively means that the specified goods will have to be rigorously vetted before they are a granted a special licence for them to be imported.

The instrument, whose lifespan is not expected to be more than three years, is designed to give local industries the opportunity to recover and grow by keeping out unnecessary imports.

However, there is a discrepancy between the figures compiled by Zimstat and those published by South Africa’s department of trade and industry.

According to the South African authorities, Zimbabwe took in goods worth US$171,2 million (R2,5 billion) in June, compared to the US$169 million recorded by Zimstat. Exports from Zimbabwe to South Africa were estimated at US$9,2 million (R135 million) in the same period.

As such, Zimbabwe’s imports outstripped exports by a staggering US$162 million in July. Overall, imports between January and June this year soared to US$959 million (R14 billion).

Zimbabwe maintained its position as the fifth-largest consumer of South Africa’s goods on the continent after Botswana, Namibia, Zambia and Mozambique respectively.

South Africa is Zimbabwe’s largest trade partner.

The disproportionately large number of imports into Zimbabwe signifies the gulf between the two economies.

While the country has been grappling with American and European Union sanctions for 16 years, South Africa – Africa’s largest economy – has been expanding.

But the decline in the value of the South African rand against a basket of world currencies, especially in 2015, led to an unprecedented growth in imports.

It is suspected that the leap of imports from June to July could have been caused by pre-emptive orders that were made before SI 64 became effective, especially by individuals in Government who knew about the policy in advance.

In a recent interview with The Sunday Mail Business, the Minister of Industry and Commerce Mr Mike Bimha, said individuals who are undermining Government policy from within were destroying the economy.

“What surprises me is that we also have elements within the systems. . . probably across even to the border, who were very much involved in the importation to the point that (what I was surprised about is that) even before the SI was announced, there were people across the border who knew that it was coming and they had already taken measures to process some of the goods so that even when we said okay, look, we will allow goods that have been processed, we were surprised by the numbers.

“When you get someone bringing in thousands and thousands of wheelbarrows you then say it has never happened before, but because someone knew that there was this Statutory Instrument coming.

“And all these wheelbarrows coming in when we have Tregers which produces high quality wheelbarrows. That is how exactly we are killing our jobs,” said Mr Bimha.

Tightening the noose

There has been demonstrable success in the import restrictions.

In July, there were no recorded statistics for bottled water, aerated water, jams, ice cream, edible ice and fruit jellies imports. A month earlier, imports of the same items had gobbled more than US$75 000.

Similarly, there is no record of human hair, fresh cheese and yoghurt imports in the same month.

Interestingly though, the import of chewing gum rose from US$1 400 in June to US$3 000 in July. Also, prepared glues and adhesives jumped from US$107 000 to US$176 000, while preparations for sunscreen/suntan increased from US$5 400 to US$8 800.

Purchases of building materials such as tiles fell marginally from US$11 400 in June to US$11 100 in July.

Experts say as local industry recovers, there is need to tighten import restrictions to ensure that only critical goods find their way onto the local market.

 

Dimaf for industry
To enhance its re-industrialisation programme, Government is also mobilising fresh low-cost funding through the Distressed Industries and Marginalised Areas Fund (Dimaf) and the Zimbabwe Economic Trade Revival Facility (Zetref).

The funds will target industries whose goods are protected by provisions of SI 64 of 2016, with Industry Minister Bimha saying re-tooling of companies was a major Government priority .

Funding constraints reduce local companies’ competitiveness in relation to peers in the region.

“We have put in place some measures towards the re-tooling of the manufacturing industry of the selected critical areas under SI 64. Government is mobilising resources under Dimaf and Zetref to ensure that all those companies protected under the SI 64 will go a long way in resuscitating industry.

“In the past, the policy measures and capital assistance for re-tooling released by Government to distressed companies has had a positive impact on industry in Bulawayo, with some of the beneficiary companies now increasing production capacity.

“This time the funds will not be there for everyone, but will target critical sectors that are supported through SI 64,”said Minister Bimha.

It is Government’s anticipation that the resource envelope for the Dimaf facility will exceed the US$40 million that was initially set aside for the project in 2011.

Companies whose linkages with downstream activities have potential to broaden economic growth will also be targeted.

The Confederation of Zimbabwe Industries says companies in Bulawayo require between US$100 million and US$150 million for re-tooling and re-habilitation.

Following the positive impact of the US$40 million Dimaf facility which helped revive the fortunes of companies such as Cairns Holdings, there is strong belief in Government that a bigger and more accessible facility could help re-position a number of firms.

Added Minister Bimha: “Without Dimaf we wouldn’t have survived this far … SI64 is still in its infancy as far as the support of local industry is concerned.

“Critical sectors require serious funding for re-tooling and re-equipping. They also require working capital for raw materials as well as export orders. We are having meetings on the sidelines of Sadc meetings to explore opportunities on these matters.”

Since 2010, Government has been trying to reverse the decline in industrial production.

Statutory Instrument 126 of 2014 imposed restrictions on the import of tubes, pipes, conveyor belts and rubber hoses, among other products.

Local industrial capacity is estimated at 34 percent.

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