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Import restrictions fail to help Zimbabwe’s producers

Apr 30 2017 09:28
Memory Mataranyika

Harare - Zimbabwean companies are battling with a flood of imports that are placing profits and pricing under pressure, despite restrictions introduced by President Robert Mugabe’s government last year.

The restrictions were put in place to curb the smuggling of finished products from neighbouring countries and the associated thriving informal sector.

Goods that are smuggled into Zimbabwe come from South Africa, Zambia and Botswana, according to City Press’ observations, and include alcohol and cool drinks, chicken, cooking oil, detergents, sugar and agricultural produce.

Delta Corporation, the Zimbabwe associate unit of AB InBev, said imports were hurting the revenue of its soft drink business.

“There was a marked increase in imports of soft drinks, mainly from Zambia and Mozambique, in the second half of the year,” the brewer said.

This had constrained revenue for the year ended March by as much as 10%.

According to statistics agency Zimstat, South Africa is the main exporter to Zimbabwe, with annual shipments worth $2.1 billion (R27.8 billion).

Singapore is the source of about $1.1 billion worth of goods shipped into Zimbabwe, bringing the country’s total import bill to $5.2 billion for last year, leading to a trade deficit of about $2.4 billion.

Willia Bonyongwe, chair of the Zimbabwe Revenue Authority, said that the import restrictions introduced by Zimbabwe last year were being affected by the liquidity situation in the country.

“Procurement of imported raw materials and capital equipment has become a nightmare, and there are long foreign payment queues at the Reserve Bank of Zimbabwe,” Bonyongwe said.

Officials at Nestlé Zimbabwe said they were developing new, smaller packaging in an effort to better market their products in a country that has been hit hard by cash shortages.

Imports have also been heightening competition for Nestlé Zimbabwe.

Kumbirai Katsande, chair of Nestlé Zimbabwe, said: “The minimum price we had for our products was $1.50, so we had to come to the market with pricing that is less than 50c, which will enable us to compete against some imported products that are cheaper than ours.”

The company manufactures consumables such as milk and cereals.

Zimbabwe Industry and Commerce Minister Mike Bimha said government knew that imports caused problems for local manufacturers.

“We are aware of the imports that come into the country, and we have set up an interministerial committee to look into this issue because our efforts will cut across departments,” Bimha said.

He said that the committee would focus on, among other things, increased monitoring of the flow of goods through the Beitbridge border post, the monitoring of goods on shop shelves and dealing with informal traders.

Kipson Gundani, an economist at advocacy group Buy Zimbabwe, said government should deal with the rampant smuggling of finished products into the country.

“We have a law that deals with imports in an effort to reduce our import bill. But we are still seeing goods coming into Zimbabwe through our porous borders. Government should fix this if we are to allow our local companies to grow production and capacity,” said Gundani.

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