Zim: Industry protectionist policy may backfire on government
The government has restricted the importation of poultry and sugar in a bid to protect the local manufacturing sector, which has been unable to cope with the competition from the influx of goods from South Africa.
Last week the agriculture ministry banned the importation of maize into the country and, in the process, gave the state-owned Grain Marketing Board a monopoly in maize procurement.
The utilisation of factory capacity in the manufacturing sector is just under 39%, according to the latest statistics from the Confederation of Zimbabwe Industries.
Under-capitalisation, liquidity constraints, high interest rates on short-term loans and high operational costs have been highlighted by the confederation as the main factors contributing to the continued decline in productivity of the manufacturing sector.
Abigail Shonhiwa, the industry and commerce department's permanent secretary, said new legislation was designed to manage imports.
"Import licencing is not banning imports, but we would like to manage them so that we [only] bring into the country what is necessary," she said.
Vince Musewe, an independent economist in Harare, said the government's move was muddled by policy inconsistency. He criticised it for not consulting key stakeholders on the consequences of its actions.
"The banning of imports may be fine and many countries in the world do so to protect themselves, but first there must be capacity in the local industry," he said.
"People are not necessarily buying sugar from South Africa because the local product is expensive; it is because the local industry cannot meet demand."
A better option, Musewe said, would be for the government to increase duty on the imports, as opposed to outright bans. This would allow consumers to make their own choices.
"If the situation is not managed properly, we will see the creation of a black market mushrooming in the near future," Musewe warned.
Allen Hungwe, a political commentator, said protectionist policies would not work and could backfire on the government.
Increase in corruption tendencies
"Given the state of the economy and dwindling disposable incomes, the current price-pegging in Zimbabwe is unaffordable for the ordinary person. What we are likely to see is more illicit trade in those commodities and an increase in corruption tendencies to bring them into the country."
Busisa Moyo, the chief executive of United Refineries, applauded the government for protecting local industry.
"I believe in protection. [It will] allow for competitiveness to return to industry, as we have not been able to retool ourselves," said Moyo.
"Some degree of protection, say of between five to eight years, would give industries a chance to re-emerge. But we need to get the balance right in other areas as well, such as power supply, labour costs and utility bills – if we are to see tangible results."
Industry and Commerce Minister Michael Bimha did not return calls.