HARARE – Government plans to establish a regulatory body and laws to control the standards of imports, Industry minister Mike Bimha says.
This comes on the back of a massive influx of cheap and sub-standard goods into the country as its manufacturing sector remains depressed, operating at below 40 percent capacity.
“We are working on a piece of legislation that will create a regulator who will have the power to make decisions on imported goods,” Bimha said last Friday, adding that government was formulating a Quality Standards Act.
The imports have also threatened revival and viability of local industry.
In 2009, government slashed duty on various products in a bid to alleviate commodity shortages but the move triggered the flooding of poor quality imported textiles, shoes, and electronic gadgets, thereby crowding out locally-produced goods.
“We want imported goods to meet international specifications and I hope the Act will be passed before the current Parliament expires,” he said.
But after a decade-long economic meltdown, coupled with collapse of the local currency and subsequent adoption of a multi-currency system — dominated by the United States dollar — in early 2009, the country’s manufacturing sector is struggling to survive.
Bimha added that government was also “looking at ways to regulate imports through tariffs to help local industries operate viably.”
“The main priority of my ministry is to revive industry and we will not allow the sector to die. As much as we want the local industry to be competitive, there is need to introduce high import tariffs so that we can stimulate production in the country,” he said.
Zimbabwe’s import bill has been rising in the past decade due to the demise of the manufacturing industry which was exacerbated by the illegal sanctions imposed by western countries.
As a result, local industry has been failing to meet demand. Imports reached $6,6 billion against exports of $2,3 billion in the nine months to September this year.
Bimha said some retailers who were forced to import almost everything during the hyper-inflationary period had continued to import goods that are now locally available putting local industry under strain.
“Some have taken advantage of our porous borders to bring in goods that are locally available without paying any duty hence prejudicing the Zimbabwe Revenue Authority of potential revenue.
“For the tariff exercise to work, we have to deal with the issue of the borders first and then apply the new tariff regime,” he said.
Market experts, however, contend that while such a policy is necessary to protect and promote local industry and to reduce consumption of imports, it is premature for government to approve the move before addressing challenges besetting industry whose capacity utilisation dropped to below 40 percent this year.
Economist Christopher Mugaga said formulation of the policy was necessary but could result in retail inflation.
“Locally produced products are relatively expensive, therefore we run the risk of retail inflation if the policy is passed. It could also disenfranchise consumerism as consumers have the right to choose what they want as well as what they perceive to be quality,” he said.
Mugaga also pointed out that if approved the regulations could lead to a creation of parallel retail supermarkets on the streets because of unfair laws in the formal sector.
“Local products are limited due to supply bottlenecks so we cannot create a market for something which is in short supply,” he said.
Industry experts also believe government should channel its efforts towards addressing critical issues such as company closures, low capacity utilisation, erratic electricity supply, low farm productivity, liquidity constraints and under-capitalisation of banks.
Last month a report by the National Social Security Authority (Nssa) revealed that more than 700 firms in Harare and close to 1 000 in Bulawayo had closed shop dashing hopes of a quick economic turnaround under the new Zanu PF government.
This has resulted in thousands of workers being thrown onto the streets to join the teeming ranks of the unemployed estimated at above 80 percent.