HomeBusiness DigestSA reduces export duty

SA reduces export duty

Godfrey Marawanyika/Chris Goko

SOUTH Africa has reduced export duty on all products from Southern African Development Community (Sadc) nations, which has prompted the Confederation of Zimbabwe Industries (CZ

I)’s call for local exporters to take advantage to increase exports.


Trade analysts this week said the adjustment was in line with the Sadc trade protocol, to which Zimbabwe is signatory.


With effect from January 1 this year, Pretoria said it had implemented a phased tariff reduction on certain products. The adjustment would benefit the Sadc region and on another level serve some European Union (EU) trade agreements.


Under the arrangement, products like clothing, electricals, machinery, live animals and shoes will attract either very minimal or no duty at all.


A vast majority of the goods will attract a duty of between 6-10%, while some will be duty-free.


Some products, which fall within SA’s chapter 1-57 on trade, will attract no duty and these include live animals.


Some products in Chapter 61 will attract no duty whilst others will attract a 10%.


Products in Chapter 62, which covers clothing, will attract a 10% duty, whilst Chapter 64 products which comprises shoes, will attract a 6% duty.


Steel products, which are covered under Chapter 64,06-85, will be duty-free.


Farai Zizhou, the CZI chief executive, this week said the reduction of tariffs was a welcome development and urged local industrialists to take advantage.


“The amendments effectively make most of the products destined for SA almost duty-free,” he said.


“The stage has now been set for locals to take advantage of the South African market since the duties have been lowered or totally removed,” Zizhou told businessdigest.


SA has also made concessions on its trade agreements with the EU which have somewhat unnerved local exporters.


Exporters who spoke to this paper on Wednesday said local companies faced stiff competition in EU markets because the latter’s industries enjoyed both subsidies and strong economies. Apart from these issues, strong currencies when compared to the Zimbabwean dollar, also helped them.

“EU farmers, for instance, get a lot of support from their governments and various organisations,” said one industrialist.


“The same goes for their exporters who enjoy a lot of concessions. The same cannot be said of local exporters who have to battle to access foreign currency on the auction floors.”


The industrialist said Zimbabwean exporters faced competition from other Sadc members for the same EU markets.


Zizhou called for greater government support and policy interventions in building exports to SA and abroad.


“We call upon government to ensure that the pricing mechanism for our exports remains viable,” he said.


In January, the CZI raised concerns at the continued loss of relevance of the foreign currency auction system, saying the Reserve Bank’s “controlled” exchange rate was affecting industrial performance and hurting exporters.

It lobbied unsuccessfully for the liberalisation of the auction system, which it argued had entrenched distortions because the two-tier Tuesday and Thursday exchange rate systems always differed.


Industrialists also appealed to the central bank to adjust the auction rate for it to remain relevant.Although the demand was not immedialtely accepted, the auction rate this month finally breached the $6 000 mark against the US dollar.


Last month, the central bank gave a new deal for exporters, who had in the past sold their hard currency in exchange for Zimbabwe dollars. They can now retain more than half of it in their local foreign currency accounts.


This effectively means that local exporters will no longer have to dispose of their earnings at the official rate of $824 against the greenback.


In the past, exporters were forced to dispose of all their foreign currency earnings to the central bank in exchange for local currency within a 60-day period, with a least a tenth of the money sold at $824 against the US dollar.

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