Bimha lambasts protectionism

HARARE - Industry minister Mike Bimha has lambasted protectionism measures recently imposed by government arguing they are protecting inefficient local firms.

He said government will not take part in conserving industries that, without competition, “will kill the people of Zimbabwe”.

“Shutting out all borders would be a brilliant idea as politicians but as government we should consider all the regional conventions we subscribe to,” Bimha told a 2014 economic outlook symposium in Harare yesterday, adding that government will not protect companies that will come up with prices that affect consumers.

This comes as Finance minister Patrick Chinamasa, in his 2014 National Budget, said government will impose protectionist strategies, including increasing import duty on finished products, to guard against continued flooding of imports.

“Government will be instituting measures to manage imports as well as maintenance of an even playing field with regards to cheap imports,” he said.

As part of the measures, the Treasury chief hiked duty for 22 products to levels of around 40 percent from between five and 15 percent. Goods such as dairy products, wheelbarrows, plastic products such as buckets and plates, PVC pipes and steel products which include cast iron pots and galvanised steel sheets are included.

Chinamasa said while the modest support measures introduced by government have gradually yielded positive results, particularly on the poultry, fruits, cooking oil, prepared foodstuffs, beverages and other products, such imported finished products as dairy, vegetables, soaps and refrigerators have remained on an upward trend, regardless of the potential for local production.

To encourage productivity and competitiveness of local products, Chinamasa scrapped duty on raw materials for a number of sectors such as dairy, rubber, clothing and textile.

However, he noted that “short-term protectionist measures can lead to short-term gains at the expense of the medium-term recovery.”

“The effectiveness of such measures could also be affected by the lack of capacity.”

Zimbabwe’s manufacturing sector is currently producing at below 40 percent capacity.

Meanwhile, Bimha said the tariff regime will be used as a development tool, not a monopoly instrument.

“Under ZimAsset (government’s new economic blueprint), we say that the tariffs are a development tool to help our ailing industries not to stifle out competition and protect incompetence,” he said.

“Industrial Development Cooperation (IDC), will be reconfigured and resuscitated and focus on industrial development, in terms of thinking the IDC will facilitate development of the industrial front,” Bimha said.

“Not all companies should be recapitalised, some should just be left to rest,” he said.

Comments (1)

Lets protect that which can be protected. Zimbabwean industries are empty shells and there is nothing to protect. Please dont kill Zimbabweans in a bid to save the life of dead companies

Mukorekore Mukuru - 20 January 2014

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