The Sunday Mail
FINANCE and Economic Development Minister Mr Patrick Chinamasa made the most determined assault on imports when he unveiled a raft of tax measures to control the rising tide when he announced the Mid Term Fiscal Policy review on September 11.
However, an increasingly desperate industry, which continues to be smothered by an influx of imported goods, is ratcheting up pressure on Treasury to totally ban the import of commodities that are and can ideally be manufactured by local companies when the 2015 National Budget is announced on Thursday.
Excise duty on diesel and petrol has since been increased to 30 cents and 35 cents from 25 cents and 30 cents respectively, while mobile handset imports now attract a customs duty of 25 percent.
Also duties on various vehicle classes such as single cabs of a payload more than 800 kilogrammes and not exceeding 1400kg, buses of a carrying capacity of more than 26 passengers, including passenger vehicles of an engine capacity below 1 500cc, was hiked to 40 percent.
The customs duty for a double cab truck has since been adjusted from 40 percent to 60 percent as a deliberate move to spur the capacity of the local motor industry, which currently stands at 1 percent.
Vehicle imports had grown so much that they were now accounting for 10 percent of the country’s import bill.
Last year, Zimbabweans bought vehicles worth more than US$484 million and in the first six months of the year the vehicle import bill had jumped to US$167 million.
Car imports, as a result, have been dropping remarkably.
Latest statistics show that vehicle imports through Beitbridge Border Post – the country’s busiest port of entry – dropped 325 percent as a result of the new duty dispensation.
Similar adjustments were also made for cooking oil, poultry, soap, maize meal, flour, beverages, dairy produce, furniture, sugar, fresh and canned fruits and vegetables, whose average duties are now 40 percent.
But industry’s call for a total ban is still unrelenting.
Last week, Zimbabwe National Chamber of Commerce (ZNCC) vice-president Mr Davison Norupiri said the threat posed by imports still exists and Government needed to ban products that can be locally made in order to induce economic growth.
He noted that the local economy was prejudiced of more than US$100 million last year through the import of corn snaks (Jiggies).
“As a Chamber, our submission to the National Budget centres on the influx of cheap imported goods. Government has done a lot to curb the influx of imported goods through the imposition of high duties in the Mid Term Fiscal Policy review statement, especially on cooking oil, but we still see more goods coming in.
“We want Government to plug all these loopholes. For instance, the country lost US$100 million last year through importing Jiggies (corn snaks), which we can produce locally.
“Importing such products affects local farmers because these Jiggies are made from maize, which is largely genetically modified as opposed to organically produced maize that is found in Zimbabwe.
“Remember, GMOs are banned in Zimbabwe so the Ministry of Health should also intervene to see if the citizens’ health is not being compromised.
“So, we want the Minister of Finance to address this anomaly so that we bring back the competitiveness of local companies and support our farmers. If local companies are working well, they create employment for the population and provide revenue to Government through taxes such as paye (pay as you earn),” said Mr Norupiri.
Although acknowledging current Government efforts to boost local power generation, Mr Norupiri indicated that there was urgent need to provide relief to companies that are trying to find their footing.
Government has engaged Chinese contractor Sino Hyro to expand Kariba South hydropower statition, a development that is expected to add 300MW to the local grid by 2017.
The same company has also been engaged to add units seven and eight to Hwange Thermal Power Station in order to generate 600MW for local consumers.
Local bakers under the ambit of the National Bakers’ Association of Zimbabwe (NBAZ) claimed that the situation where some local companies are importing frozen dough or even finished cakes from South Africa is untenable.
NBAZ president Mr Givemore Mesoemvura said there was need for Government to consider banning the importation of semi-processed and processed flour.
“We proposed a total ban of semi-processed and processed flour; we cannot have a situation whereby the country is importing cakes from Cape Town (South Africa).
“Even the dough for bread is frozen and sent to Zimbabwe from South Africa.
“So, if the ban on semi-processed and processed flour is effected, then we will increase the uptake of flour.
“We have also requested Government to restore our quota of 7 500 metric tonnes (mt) of flour per month which we import so that we blend it with the 22 500mt we get locally, so as to improve the quality of our product. So, the 7,500mt of imported flour is small but it makes a big difference.
“We are also appealing for the relaxation of labour laws so that we are able to negotiate with employees as opposed to watching while the companies are falling.
“In terms of working capital, we submitted our views in the Mid-Term Fiscal Policy review statement but we have realised Government is facing challenges so we are organising with banks on our own,” said Mr Mesoemvura.
Grain Millers’ Association of Zimbabwe (GMAZ) chairman Mr Tafadzwa Musarara proposed a 30 percent hike on maize and wheat imports in order to try and promote contract farming of the two crops.
It is believed that such a punitive measure will help make growing maize and wheat viable.
“What we want is higher duty on maize meal and wheat so that we encourage contract farming.
“If the duty is increased to about 30 percent, we are going to promote local growing of maize and wheat.
“Surely, we cannot have two of our big millers — Victoria Foods and Blue Ribbon Foods — having operational challenges while we watch,” said Mr Musarara.
The Bankers’ Association of Zimbabwe (BAZ), whose members are reeling from non-performing loans and a highly illiquid environment, said they could not negotiate in the media.
Market watchers say it could be difficult for Minister Chinamasa to make additional concessions, particularly in the wake of significant local and global economic headwinds.
Commodity prices continue dropping on the international market.
Gold and platinum, which have been key exports, are trading softer at between US$1 150 and US$2 200 per ounce respectively.”
Despite all the challenges, civil servants are expectantly waiting for clarity over their bonuses.
The International Monetary Fund (IMF) recently said the country’s economy is unwell.
In line with IMF observations, Minister Chinamasa has slashed this year’s growth projections from 6,1 percent to 3,1 percent as the economy continues under performing.
Economist Mr Respect Gwenzi said Government has to attend to the country’s falling revenue base.
“Particular attention should be paid on the dwindling national revenues base that has a downstream effect on aggregate demand, which is mainly a function of consumption . . .
“Measures to combat the Government cost function should also be tabled as a way to create fiscal breathing space (and) above all, policy clarity should be priority as a way of encouraging investors . . .” said Mr Gwenzi.
