Import duty lift won’t turn Zim into SA supermarket – says Treasury PS as he blasts ‘wanton price hikes’ – NewZimbabwe.com

By UK Correspondent

“With domestic foreign currency sales now over 80% of their sales, actually they (retailers) do not need the (RBZ) auction for their forex requirements.

“They have enough forex at the … (so) there is again no justification (for the price hikes).”

ADDRESSING belated Independence celebrations at Zimbabwe’s embassy in London last month Finance Minister Prof Mthuli Ncube reiterated a point the Treasury regularly uses as evidence that the country’s economy is firmly on the mend.

He said more than 70 percent of goods in Zimbabwe’s major retail chains are locally produced which means local industry is now back to production and jobs are being created.

This is in contrast to a few years back when the country was basically turned into a supermarket for South African manufacturers after the virtual collapse of local manufacturing.

However, Treasury recently announced a lifting of import duties on basic commodities as part of a cocktail of measures aimed at stabilising the economy amid resurgent currency volatility and price increases.

A similar decision was resorted to in May 2022, again in response to a spike in the prices of basic commodities.

Responding to questions by newzimbabwe.com Finance Ministry permanent secretary, George Guvamatanga, said the new measures would not again turn Zimbabwe into a supermarket for South African manufacturers.

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“Not at all; it’s a temporary measure to address wanton price increases by local manufacturers as well as limited supply of goods into the formal market,” he said.

He insisted that there was no justification for the recent spate of increases in the prices of basic commodities across the economy.

“What is the justification of pricing ZWL at a rate of 2,500 to 3,000?” he added.

However, industry cites the country’s foreign currency challenges which forces companies to source money for imports from the parallel market where rates are more than twice the Reserve Bank of Zimbabwe’s auction system which also has a huge backlog.

But Guvamatanga said retailers had enough of their own foreign currency and did not need to resort to the parallel market or the RBZ auction.

“With domestic foreign currency sales now over 80% of their sales, actually they (retailers) do not need the (RBZ) auction for their forex requirements.

“They have enough forex at the … (so) there is again no justification (for the price hikes).”

Addressing a post-cabinet media briefing Tuesday, Information minister Monica Mutsvangwa also insisted that the import duty suspension was a temporary intervention.

“Import duty on the 14 basic commodities will remain suspended for six months in order to ensure their availability at competitive prices,” she said.

Industry has meanwhile warned that the move risks more harm than good to the country’s economy.

“The lifting of duties on the 11 products has more negatives than positives on the economy,” Confederation of Zimbabwe Industries (CZI) president Kurai Matsheza told local media.

“This measure means as a country we’re outsourcing the production of those products, hence exporting jobs.

“While the intention is to protect the general consumer from the price increase, the general consumer will not be importing, it’s small businesses and big to some extent who will be importing and then retailing in US dollars.

“This deepens dollarisation as basic goods will only be available in USD.”