Zimbabwe: Let's Gradually Promote Locally-Produced Goods

opinion

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.

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.

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