FIGURES from the 2013 budget recently presented by Finance minister Tendai Biti show the country’s import bill for the period January to October 2012 totalled US$6,5 billion compared to exports of US$3,09 billion for the same period.
Report ByPeter Gambara
The import bill is projected to grow to US$8,5 billion, while exports would go up to US$5,5 billion in 2013, resulting in a negative current account balance of US$3 billion.
OK Zimbabwe’s chief operating officer Albert Katsande acknowledged his supermarket business is importing 65% of the goods on their shelves.
A few weeks ago the Confederation of Zimbabwe Industries survey showed that capacity utilisation in industry has gone down from an average 57,2% to 44,5% over the past year.
It is not a secret that Zimbabwean companies declined to near-collapse or closed during the hyperinflation period leading to 2008, and by the time dollarisation was eventually introduced in February 2009, most of them had crumbled and had to start afresh.
Capacity utilisation eventually improved from lows of 10-30% in 2009 to over 50% in 2011. However, we seem to be on a downward trend once again.
Coming from that hyperinflation environment, it made sense to simply import almost everything as our shelves were completely empty then.
Those supermarkets that could easily import goods from South Africa like Spar quickly established themselves at the expense of the traditional ones like OK and TM.
However, it would look like our supermarkets have failed to adjust since then; they seem to go the easy route, just importing everything at grave consequences to local industry.
Having recovered from that difficult period, companies should deliberately promote local products at the expense of imports.
We need to support the resuscitation of local industry by preferring local products to imported ones.
How do we expect capacity utilisation in our local industry to go up when 65% of products in supermarkets are imported? We need to abandon the business as usual approach and adopt a paradigm shift for the good of our economy.
We can learn a few tricks from the Chinese. They have managed to grow their economy to the second largest in the world because they are selfish and it has helped them.
They manufacture almost everything, their own cellphone handsets, tractors, vehicles, clothing, you name it, but they always try to have a Chinese version of it.
We mock their products as “Zhing Zhong”, but look at what is happening to their economy as they support their products religiously. Supermarkets can start by reducing imported goods in their shelves to at most 50%.
They can also try to promote local products by adopting differential mark- ups for local products, for instance where they were applying a uniform mark-up of say 15%, they could lower the mark-up on local products to 10% and increase the mark -up on imported goods to 20%.
They can also deliberately import less of those goods that are made locally, for example cooking oil, soaps, margarine etc.
Justice minister Patrick Chinamasa was right when he recently pointed out that the Meikles/Pick n’ Pay partnership is a real slap in the face for locals. Visit TM Westgate and see how the current changeover to Pick n’ Pay has resulted in local goods being substituted by imports which now account for over 90% of the produces in the store. Only fresh vegetables and confectionaries are still local.
Our own shopping is another way through which we are shooting ourselves in the foot.
How many of us will choose to buy a Zimbabwean product when faced with an option of same-priced imports.
I have had numerous wars with my wife when we go shopping together because when I try to persuade her to buy a Zimbabwean product even if it cost a few more cents she has always argues that if she adds up those few cents, she might end up buying something extra.
I am sure a lot of shoppers think the same way, but by doing so you are denying a Zimbabwean colleague a job as many companies continue to close down due to dampened demand for local products.
It is therefore welcome Finance minister Biti is imposing a 25% surtax on soaps, meat products, beverages, dairy products and cooking oil, in addition to imposing a US$1,50 per kg or 40% customs duty on imported chicken.
We hope this will take away the price advantage that imported goods have over locally-produced ones.
Many people lamented Biti could not allocate enough resources to the various demands presented to him but I tend to agree with the chairman of the budget portfolio committee Paddy Zhanda who said we should aim to have a US$10 billion budget before we can seriously talk of allocating adequate resources to different sectors and ministries.
However, we can only reach that US$10 billion budget if we start now by choosing to support our own Zimbabwean products.
The more products that our companies produce, the more profitable they would become, hence the more tax revenues to the fiscus. As these companies prosper, they will employ more people and pay their workers good salaries which mean more buying power for the workers and hence more demand for the goods in the supermarkets.
The workers will also pay more taxes on their salaries and VAT on the goods they buy, once more resulting in more revenue accruing to Treasury.
Biti also highlighted during the last budget that most of these imported goods are escaping the net at the ports of entry and are not paying the customs duty, hence depriving the state of much-needed resources.
Zimra officials are just too comfortable, the department keeps a certain percentage of the monies that they collect and therefore can afford to pay very good salaries to their staff.
We need a wakeup call at Zimra.
One area Biti needs to exercise his mind over his promise to deepen and widen the revenue base is the informal sector. He should seriously engage Zimra in trying to collect taxes from that sector.
It is very clear that our industries that create jobs are not expanding. Limiting exports will help local industry recover and create jobs.
Peter Gambara is an agricultural economist and agricultural consultant with AgriExpert, a consultancy firm. He writes in his personal capacity. His email address is pgambara@hotmail.com
The question of local against foreign is really a basic one. Does the quality conform with the price charged?
Protecting inefficient industry is not the solution, it is self defeating. You only need to look at what the major cost drivers for industry are and then take things from there. How can something that travels 1 000km by road from Joburg be cheaper than something coming from across the road. The reasons are two fold..it could be imports are being dumped here or the local industry has got a skewered cost base. Looking at the latter, the former President of CZI has said that USD3 Billion is locked in cars driving down the roads instead of being in productive machinery that creates value. Secondlly loss making parastatals have tried to break even by charging ridiculous tariffs for their products because of monopoly (CZI has taken ZESA to court),Salaries and benefits enjoyed by senior management is commensurate with the contribution they make to the bottom line of their companies. Schools have become robber barons charging ridiculous levies straining household incomes to breaking point (Cap these levies in government schools as a starting point?). Once these issues are addressed things will fall into place.
Zimbabwean consumers love their local products but they are pushed out of their reach and sermonising on how important it is to buy local is going to do the trick. Of course ZIMRA will make more by ensuring that imports pay their share of duty to ensure that there is an even playing field but presently, so much is coming in without duty killing local industry and reducing ZIMRA receipts in the process. This is a vital issue and I feel it has not been discussed enough and attention paid to it is cursory glance. The CZI for its part has to be commended for trying to bring this issue to the forefront of national discourse. More can still be done and I have faith (blind?) in Mr. Katsande’s ability to give this issue the prominence and attention it deserves! Of course coming out with alarmist figures has nothing to do with this, but cold hard facts will carry the day as opposed to needless orchestra..leave this to the politicians, our Finance Minister appears to be quite gifted with this.
I couldnt resist this gem I saw somewhere; The economy is so fucked up, all the prostitutes in the land are virgins..
How does fully processed products, transported 1500kms, with an added cost of transport R24 000 per truck and an import duty of 40% be priced at the same price with South African product?
Answer: No Duty is paid, VAT is refunded by SARS on exit and no VAT paid to Zimra. And these transactions are done by Ministers from both MDC and Zanu.
@ Gambara- there you have it..now in the light of this how do you expect local industry to survive? And consumers should pay for all this by paying high prices for local products? This is a tad insensitive. What Hombarume says here is what is obtaining on the ground..so now where do we go from here? Should Zim industry be allowed to die to satisfy the capricious greed of a motley malignant crew (curious oxymoron?). Before ZIMRA destroys the little left of local industry they should stay clear of the informal sector until they have their house in order..What is happening at the borders is killingthe local industry and the informal sector is all that is left, please do not go and mess things up there as well. In order of importance, deal with the nonsense at the borders first!
@ Author…”Zimra officials are just too comfortable, the department keeps a certain percentage of the monies that they collect and therefore can afford to pay very good salaries to their staff” Point of correction Sir..Zimra does not keep a percentage of collections yese ya kolectwa inoenda ku Consolidated Revenue Fund..
Other products being brought into Zimbabwe should be banned outright, e.g bottled water, soft drinks, sweets, confectioneries and leave basic commodities only to come in to cushion consumers.
It’s one thing to parade ur learned thoughts and good economics. The Zimbabwean situation requires patriotism not politics but a love for ones country. We still hv to buy local to promote industry thts a fact, the idea is for locals to make sacrifice small profits for quality products but increasing demand which will translate increased turnover, capacity utilisation and profit.
Industry should not expect ppl to walk the talk while they don’t meet them halfway. An example is the banking sector which is making profits from none banking activities namely bank charges which in effect is reducing the confidence ppl hv in the banking sector. The notion remains ” better kutora Mari yangu ka1″ so at the end of the day if we don’t pull together and sacrifice we won’t reach Canaan. We will continue to wonder in the wilderness.
Let’s put Zimbabwe first. I love my Zimbabwe and I am taking my stand yo fight for u Zimbabwe
This is exciting news, lets talk more about building our lovely ZIM.
Touche. Solid arguments. Keep up the good effort.
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