Shortage of basics looms

HARARE - Zimbabweans must brace for a price hike and shortages of cooking oil, washing powder and laundry bar soaps as the downside of the introduction of a 40 percent surtax on the imported basics takes effect.

In an effort to protect the local industry from unfair competition from imported products, the government hiked import duty on selected products such as cooking oil, margarine, soap tablets and bars and washing powder from 10 percent to 40 percent last month.

The move seems to be backfiring after Bliss Brands, the South African maker of washing powder MAQ, this week decided to cease exports into Zimbabwe citing high costs that are being caused by the tax, which was imposed at the start of August, without any prior notification.

The tax is charged on the packaged product, while bulk washing powder exports do not appear to attract the tax.

Jacqueline Jacobs, marketing director of Bliss Brands, said the initial tax of 10 percent was suddenly increased to 40 percent.

“We have been exporting to Zimbabwe for at least eight years, and although we have been subjected to surtaxes before, it has never been to this extent,” she was quoted as saying.

Economic experts assert that this will cause basic commodities shortages since the hamstrung local industry has no capacity to meet demand.

According to the Confederation of Zimbabwe Industries (CZI) most companies are operating below 40 percent of capacity utilisation due to high labour, finance and utility costs, ageing machinery, power outages and lack of cheap credit lines among other things.

Figures from the Zimbabwe Statistical Agency (Zimstat) show that Zimbabwe imported products worth $3,4 billion from South Africa in the 11 months to 2013.

Overally, Zimbabwe imported products worth $7,15 billion dominated by food items, fuel, fertilisers, second-hand car imports and textiles.

Exports were at $3,25 billion of mainly minerals and tobacco, resulting in a trade deficit of the year to November of $3,89 billion.

 

Comments (8)

Some of these policies that the government implements are with good intentions but it is the timing and how the implementation is carried out that always seems to be wrong. The Land distribution was a noble idea but the way it was implemented was disastrous, Murambatsvina was meant to restore order and cleanliness in towns and cities, but they went about it the wrong way without providing any alternative houses to those affected. And now this recently announced surtax is meant to protect the local industry and thereby improve on our employment rates, but the timing is all wrong. The government should have been able to provide some form of financial bailout to struggling producer companies and even down to the farmers who produce the raw materials needed. But you and I know that the government is broke and the end result will be shortages of basic commodities and smuggling in of these goods. The government further loses out on import duty and other such charges, further denting the coffers.

Dr Know - 4 September 2014

dr know you argue in a mature manner. its easy to follow youre argument cause i can see where you disapprove of the goverment's methods and you offer possible alternative ways of doing the things. this is encouraging unilike some onesided posts from some of our friends. as a people we are not happy things going this way but we are hopeful that one day one of our kind will lead this great nation proper.

taurai - 4 September 2014

Subsidies are not the answer. Businesses need to restructure , make themselves bankable and attract fresh capital , retool and survive as a business. Unfortunately many CEOs chose to buy Land Cruisers and not fix business first. This has become a disease in Zimbabwe. Gadzirisai ma business first then mozodya ZVENYU. It can't be govt, govt all the time. Looking at the number of companies gone bust, even govt yacho where does it start from? It may have caused the problems we have but reality tells you HAPANA dhiri. Let's work and practice good business sense. This has since gone through the window. We need man and women of integrity to operate business professionally. Unfortunately few like this are left.meveryone else is a mercenary. Yava zuva radoka, Tora tiende..it will take us nowhere.

Mhofu - 5 September 2014

the only thing what comes from theyr brain is robbing zim right to the bone

jack - 5 September 2014

This is a good start that will help curb dumping of products by SA companies. This will be an opportunity for local manufacturers to rump up production, increase efficiencies due to economies of scale and also increase local employment. This was long overdue as the government was allowing imports in almost duty free whilst charging high import duties on raw materials for local manufacturers. It's the right move in the right direction. I don't see any food shortages in the horizon though but price increases due to local companies unsatiable apetite to hike prices. Imports will continue to come albeit at increased prices and less margins for the importers.

Jangwa - 5 September 2014

Iwee..., this won't solve the problem the country is facing. The biggest problem we have is that our so called Gvt spent time trying to control the influx of foreign goods to our country instead of trying to find ways to make our own products more appalling and affordable to the local market. People left the local market for a reason and believe me, they wanna come back to a better product than the one they are currently using. You can't twist someone's hand to buy something that he/she doesn't want. Nobody in his right mind wants to invest their hard earned money under the current situation... not even the Chinese. WHO wants to get aboard a ship that is already under water?

Martin - 6 September 2014

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