By Bernard Bwoni
The recently gazetted regulations under
Statutory Instrument 64 of 2016 to control and regulate the importation of
certain goods that are available locally or can be made locally requires
further debate and discussion minus any associated emotions and bias. The
recent demonstrations and burning of a warehouse at the Beitbridge Border Post
point to a number of key underlying and still to-be-debated issues. The
criminal damage at the border was unfortunate and potentially points to some individuals
or groups of individuals who are pushing their own agendas to create the
impression that the current cash crisis is a political rather than an economic problem.
That is muddling issues instead of looking at it from a point of proffering
long term remedies for the country. It is true that Zimbabwe has allowed a
problematic situation to exist whereby it imports more than it exports which
has brought to the surface all the issues of cash shortages, unemployment and
the many other related crises being witnessed. It is thus government’s
responsibility to remedy the situation through regulation of trade to create
the right environment for local businesses to fill in the gap created by this
ban. There are many anchor level commercial activities that local producers and
business people can enter into because they are low entry investment sectors. The
goods that are on the list of the restricted categories under this statutory
instrument can be made locally if not already being made locally and these are
opportunities for the domestic producers and entrepreneurs. The categorised
goods include such items as wheel barrows, lock gates, lattice masts, roofs,
roofing frames, doors, windows and window frames, shutters, corrugated roofing
sheets, baked beans, potato crisps, cereals, bottled water, mayonnaise, salad
cream, peanut butter, jams, maheu, canned fruits and vegetables, pizza base,
cheeses, ice-cream, yoghurts flavoured milks, furniture and so on. These are
products that can be made locally and this creates opportunities for the local
businesses.
Some have argued that the ban is an extreme
measure and that government should have imposed harsh anti-dumping tariffs or
rates instead. That is without a doubt a valid point but the counter argument
is that even with such measures in place, the same products would continue to
come into the country due to various reasons, mostly illegally of course, at
the entry points. The import ban is a strategic move by the government to
stimulate the growth of domestic manufacturing capacity to increase exports. Local
entrepreneurs will start producing or are already producing those goods locally
and eventually cheaply. If goods are being produced in Zimbabwe, this creates
employment as increased production minus the imports means increased sale of
the domestic product and job opportunities for Zimbabweans. It is people with
jobs who have money to spend on goods and services. This is a way of
kick-starting Zimbabwe’s economic growth. The business people from Musina are
up in arms against the Zimbabwe government’s decision to ban the imports
because it has serious repercussions and puts restrictions on their
livelihoods. The South African producers and wholesalers have unilaterally made
a claim to the Zimbabwe market as wholly theirs and will resist any entry onto
the Zimbabwe market by Zimbabwe products. That is the reason why they were
demonstrating on their side of the border. The Zimbabwe cross-border traders are
sustaining these SA businesses, they bring in the cash and in so doing
employment opportunities for South Africans. They are basically exporting
employment opportunities to the South African economy. It is a fact that the
cross-border traders have to sustain their livelihoods during these tough
economic conditions. There is no denying that and people have to survive. It is
also a fact that government has a responsibility to come up with solutions and
sometimes such solutions may be unpopular with some sections of the public.
This is a dilemma for the government which is
faced with the challenge of making decisions for the greater good of all and
for the long run. It is a fact that Zimbabwe is currently facing a cash
shortage and when people go to neighbouring countries with dollars or rands to
purchase goods for resale back in Zimbabwe, they are in fact propping up that
country’s economy. This is basic and needs to be viewed from an economic point
of view for the greater good of all not individuals. Zimbabwe has to import the
USD or Rands under the current multi-currency regime. When people buy goods
produced in South Africa for example, they are boosting sales for South African
businesses and increased sales for these businesses means more employment opportunities
for them and not for Zimbabwe. This is the reason why South African business
people are protesting as well on their side of the border against Statutory
Instrument 64 of 2016.
There is an urgent need to kick-start the
Zimbabwe economy and an import substitution industrialisation strategy is a
good starting point. This is not re-inventing the wheel as all the developed
countries and emerging economies of today have had to do that to get to where
they are today. The same argument from most people is that Zimbabwe does not
have an industry to protect and as such the import ban is ill-conceived. The
counter argument however is that, for Zimbabwe to have an industry to protect,
whatever is there or was there requires time, promotion and protection to build
capacity to be able to compete against products from outside. There is the
argument that the timing of the ban is insensitive. However, the other argument
is when is the right time? The Zimbabwe manufacturing sector is being choked by
these cheap imports the government has just banned. The local manufacturers are
struggling because a huge chunk of the local revenue is being lost to these
cheap and in most cases inessential industrial and agricultural imports which
can be made, produced and accessed locally. Zimbabwe is basically exporting
forex and employment to other economies through this over-reliance on imports.
Formal employment is not being created. The economy is heavily burdened by
these imports and it is struggling to grow. Where in this world has economic
growth has come from importing?
The value of producing wealth is in fact more
important than the wealth itself because of the long term implications. Imports
may create a profit for the individual but the long term impact on the
country’s manufacturing sector is dire. The argument being put forward by those
who are against the import ban that locally produced goods are more expensive
than the imports is very correct. It is a fact that initially protectionism can
make the price of goods more expensive. However, with time as the country
builds its capacity, the goods will be produced more cheaply locally. These are
the long-run realities of protectionism. The import ban may appear insensitive
but in reality it is not anti-people. The Zimbabwe government is responding to
the situation and looking at fostering a local economy where wealth creation
improves the economic and social fortunes of the majority. This is about an
economy that focuses on all and not just certain individuals. It is not always
going to be possible to have it both ways. Governments have the responsibility
to make bold and sometimes unpopular decisions for the greater good of the
majority. Businesses and factories are struggling in Zimbabwe owing to intense
competition from these cheap imports. The country is thus faced with a real
dilemma, to either leave the local manufacturers and businesses struggling so
as to sustain the cross border traders whose livelihoods depends on such
imports into the country.
The country is importing some basic products
that could easily be or already being manufactured in Zimbabwe. The country is
not exporting enough to counter the excessive imports into the country. The
shelves are filled to the top with a wide variety of imports and that is not
sustainable. It is a tough choice between the Zimbabwean consumer embracing the
local product for long term benefits or variety and abundance in supermarkets
for instant gratification.
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