Local companies under threat from foreigners

Companies in Zimbabwe need protection from foreign ones who are finding their way into and strengthening their positions in the local market, a Competition and Tariff Commission (CTC) official said.

Report Fidelity Mhlanga

CTC Assistant director Benjamin Chinhengo said most local industries were in their infancy due to the hyperinflation that crippled Zimbabwe since year 2000, and industry was in dire need of protection from foreign competition until such a time as they can stave off competition.

He said most local companies were importing both raw materials and finished goods.

However, the locals faced unfair competition from the foreigners, from whom they imported who eventually stole their market
“The issue is that there is great demand which is not being met by local producers. The coming in of the multinational would be most welcome by consumers for a wider choice reasons but it would be harmful to local industry,” Chinhengo said.

“It is unfortunate that Zimbabwe is coming from a hyperinflation era, otherwise it would make economic sense to strengthen local industry and then have foreign players penetrate other markets, be they regional or international.”

At the peak of hyperinflation and at the introduction of the multi-currency regime in 2009, locally produced goods were scarce as the local industry had almost stopped production, resorting to imports for resale.

Imported goods are generally much cheaper than locally-produced products because the majority of local companies are operating obsolete equipment and machinery.

High production costs are attributable to the dilapidated machinery being used by most local companies and high input costs.

The commission said it has handled 500 competition cases since inception in 2001, with big cases involving the Delta/Schweppes merger, Rothmans of Palmall, Coca Cola,Cadbury and Schweppes, Total/Mobil merger as well as Kingdom Bank/Meikles merger.

Chinhengo said the issue of mergers and acquisitions was not a threat in Zimbabwe as the reasons for merging were varied, from consolidating the company position, strengthening the balance sheet, generating foreign currency and rescuing failing firms.

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