HARARE - Zimbabwe has threatened to scrap protectionist measures, arguing that the country's industries must be competitive.
Industry minister, Mike Bimha, said measures recently imposed by government were “protecting inefficient firms”, adding that local firms must not expect protection, but support.
“We will do all we can to support local industries, please note that support is all it is not protection,” he told a recent Confederation of Zimbabwe Industries (CZI) congress in Mutare.
“Not all companies should be recapitalised, some should just be left to rest, if they cannot survive,” he said.
This comes as in the 2014 national budget, Finance minister Patrick Chinamasa announced that government would impose protectionist
measures, which included increasing import duty on finished deter rising 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 also scrapped duty on raw materials for a number of sector such as dairy, rubber, clothing and textiles.
He said while the protectionist measures have gradually yielded positive results – particularly on the poultry, fruits, cooking oil, prepared foodstuffs, beverages and other products – imports of finished products such as dairy, soaps and refrigerators have remained on an upward trend, regardless of capacity to locally produce them.
However, he noted that “short-term protectionist measures can lead to short-term gains at the expense of the medium-term recovery.”
Zimbabwe’s manufacturing sector is in dire straits, requiring around $10 billion, according to analysts, to re-tool and rebuild capacity.
Apart from a biting liquidity crisis, the industry – operating at below 40 percent capacity utilisation – faces excessive power outages, depressed foreign investor participation and limited credit lines, among other challenges.
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.”