Finance and Economic Development permanent secretary George Guvamatanga assured that the new measures including the lifting of import duties on basic commodities to stabilize the economy amid currency volatility and price increases would not turn Zimbabwe into a supermarket for South African manufacturers again.
The measures were announced by Finance Minister, Professor Mthuli Ncube, in a bid to stabilise the exchange rate and macroeconomy.
Some stakeholders including Buy Zimbabwe expressed concern over the removal of import duty on basic commodities, believing it would threaten the local manufacturing industry’s 66% capacity utilisation by exposing it to cheaper imports.
However, Guvamatanga disagrees that the removal of import duty on basic commodities will threaten the local manufacturing industry. He stated that it’s a temporary measure to curb the recent price increases by local manufacturers and the limited supply of goods in the formal market.
Guvamatanga also argued that there is no justification for the recent price hikes in basic commodities across the economy. Despite the industry citing foreign currency challenges, Guvamatanga said retailers have enough of their own foreign currency and don’t need to resort to the parallel market or the RBZ auction, with domestic foreign currency sales accounting for over 80% of their sales.
Addressing a post-cabinet media briefing Tuesday, Information Minister Monica Mutsvangwa also insisted that the import duty suspension was a temporary intervention. She said:
Import duty on the 14 basic commodities will remain suspended for six months in order to ensure their availability at competitive prices.
Finance Minister Ncube claimed over 70% of goods in Zimbabwe’s major retail chains are locally produced, indicating that local industry is back to production and creating jobs. He made the remarks while speaking at Zimbabwe’s embassy in London last month for belated Independence celebrations. This is in contrast to a few years ago when the country relied heavily on South African manufacturers due to the collapse of local manufacturing. Lifting the import ban on certain basic commodities will raise the proportion of imported to domestically produced goods.
The Confederation of Zimbabwe Industries (CZI) president, Kurai Matsheza, has warned that removing import duties on 11 products could cause more harm than good to the economy. He stated that the measure would export production of those products, leading to job losses. Matsheza said while the intent is to protect consumers from price increases, small and large businesses will be the ones importing and retailing in USD, further deepening dollarisation as basic goods will only be available in USD.