- The government suspended duty on 11 basic goods on the 11th of May
- However, the Competition and Tariff Commission notes that this is a curse to local producers
- Zimbabwe’s products are very expensive compared to regional prices
Harare- Competition and Tariff Commission together with National Competitiveness Commission says the government should in the short term reverse the opening of imports to protect the local industry from stiff competition. The duty-free period is expected to last for six months.
On the 11th of May 2023, the government suspended duty on 11 basic commodities for six months including mealie-meal, rice, cooking oil and sugar to fight price madness. However, this exposed the local manufacturers to rife competition.
In a joint study sought to assess pricing disparities of basic commodities including tracking the impact of the removal of import licenses and duties on the basic commodities on price stabilisation, the Organisations urged the government to: “Reverse the opening of imports in the short run to protect the gains once realised by the local industry on the following products; mealie meal, toothpaste and washing as this hurt NDS1 aspirations on the domestication of local value chains.”
Data according to the joint study shows that in 2022 when duty was suspended on basic commodities, industry capacity utilisation slipped by 1%.
However, the latest measure makes the local products uncompetitive given that Zimbabwean prices are higher than regional prices. Locally made products will hardly compete with products from South Africa, Botswana and Zambia, particularly South Africa which is the largest trading partner of Zimbabwe.
For instance, Zimbabwe’s mealie-meal industry will struggle as for maize, the producer price set by the government of US$325/ton is higher than the US$200/ tonne currently prevailing in countries such as South Africa and Zambia.
The government reported that locally produced goods catered for 80% of space in retail shops against 20% of imports.
Since the post-COVID-19 era, the local manufacturing sector recorded an increase in production capacity from 36% before the outbreak of the COVID-19 pandemic to 66% in 2022.
Capacity utilisation for the foodstuff subsector where basic commodities are suspended from duty narrowed to 54% in 2022 from 55% in 2021.
Data from the CZI’s Annual Manufacturing Sector Survey Report for 2022 projected that capacity utilization will increase to 70.9% in 2023 from 56.1% in 2022. The foodstuffs subsector capacity utilisation was projected to increase from 54% to 71%.
However, following the lifting of all restrictions on the importation of basic commodities as a measure to stabilise the macroeconomy, these projections are likely to have short legs.
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