- Mthuli Ncube scrapped duty and licences on the importation of basic goods
- This will benefit South African producers more while exerting competition on local producers
- However, local producers can keep 100% of their foreign currency earnings from local sales
Harare- Finance and Economic Development Minister, Professor Mthuli Ncube has thrown the local producers under the bus after scrapping duty on the importation of all basic goods. The latest measure will defeat the 70% consumption rhetoric of locally produced goods.
The latest measure, despite costing the local producers will downsize the industry capacity utilisation, thus, reducing the country to a consumer economy. Zimbabwe is already a net importer of various vital products, including food.
South African producers will benefit more as South Africa is Zimbabwe’s biggest trading partner while exerting stiff competition on the local producers.
This, makes the measure more of a reactionary policy than a well-informed one.
Despite benefiting the public through the provision of cheaper goods in the market amid tough economic conditions due to currency depreciation and global inflation risks, it weighs more on the economy as increased competition will dampen productivity, thus, Zimbabwe will continue as a net importer, rather than an exporter.
In a statement released yesterday, Ncube said all basic commodities will be exempted from duty while local producers retain 100% of their foreign currency earnings from local sales.
“In order to enhance the supply of basic goods to the public, all basic goods will no longer be subject to import licenses, and will also come to the country free of import duties and taxes,” said Ncube in a statement.
The development is to counter the rapid depreciation of the local currency which has spiked prices of basic commodities as producers battles to generate returns. Since the introduction of the Zimbabwe dollar, despite a busload of economic policies passed by Ncube and RBZ Governor John Mangudya, the local currency has depreciated by over 99.9% while the US dollar has appreciated by over 100%. In 2023 alone, year-on-year losses have widened by 85% while year-to-date losses by 37.3%.
Due to this currency instability, producers have resorted to spiking the prices of their products to generate returns. The loaf of bread has spiked to over US$1 using the official rate which is currently at ZWL12012.5448.
It is against the government’s Buy Zimbabwe initiative which is targeting to promote local products by 100%.
In 2022, Ncube lauded his economic policies and local producers after he said 70% of goods sold were produced locally.
The current measures were once applied in 2022 for six months as Ncube battled with inflationary pressures.
However, to appease local producers, Ncube scrapped the 15% retention threshold, meaning local producers will now retain 100% of their foreign currency sales.
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