The Sunday News
Shepias Dube in Victoria Falls
THE Government is working tirelessly to reduce the country’s current account deficit through crafting various import substitution and export promotion policies, a Cabinet minister has said. Speaking at the Buy Local Summit in Victoria Falls on Friday last week, Industry and Commerce Minister Mike Bimha said the import substitution strategies being implemented by Government through his ministry were in line with the country’s economic blueprint, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation.
“The Government has shown commitment to improve the current account balance through continuously implementing a number of measures such as licensing, tariff review, enhancing competitiveness, improving market access and pre-shipment inspection,” Minister Bimha said.
He said powerful economies such as India, Brazil and China had achieved favourable current account balances and high economic growth rates by implementing such substitution strategies and encouraged value-addition of their locally produced goods.
Imports continue to outpace exports as the country continues to lose competitiveness due to the strengthening of the United States dollar against currencies of Zimbabwe’s trading partners, a decline in commodity prices and a very slow growth in manufactured exports.
In January 2014, the country’s exports amounted to $278 million and imports totalled $487 million, resulting in a deficit of $209 million.
The January 2015 trade statistics produced by Zimstats show January total exports of $538 million resulting in a current account deficit of $271 million, reflecting a 29,6 percent increase in the deficit. Imports increased by 10,5 percent while exports shrunk by four percent.
Minister Bimha said the Government set up the National Competitiveness Commission whose mandate is to look into the ease of doing business, including dealing with the major cost drivers of locally produced goods.
“Among major cost drivers are the utilities’ charges such as water, Zesa, transportation, labour which is allegedly, on average, higher than that in the region,” he said.
Minister Bimha said addressing these major cost drivers was expected to make the locally produced goods more competitive in terms of prices and thus promote their consumption at the same time managing the current account.
He also said Government offered rebates and incentives to the manufacturing industry in an effort to recapitalise and retool them.
“These incentives are industry growth drivers as they are targeted at making domestic products more competitive and promoting exports,” the minister said.
Sectors where manufacturing rebates are applied include the clothing and textile, electrical, agro-processing and motor.
Furthermore, most raw materials and capital goods are imported into Zimbabwe at zero or very low duty rates by virtue of tariff classification. These include agricultural, manufacturing and mining equipment.
Duties on raw materials for cooking oil production, soya bean crude oil, aluminium cans, and white sugar were reduced while duties on finished products in the blanket, paint, rubber, metal and electrical manufacturing industries were increased to promote growth of the domestic manufacturing industry.
In addition Minister Bimha said Government had removed a number of goods from Open General Import Licensing through Statutory Instrument 126 of 2014 in order to control importation of goods that can be sourced locally.
Permits on goods like chickens, maize, mealie-meal, yeasts are issued by the Ministry of Agriculture, Mechanisation and Irrigation Development while licences on cooking oil, butter, cream, refined sugar, margarine, fertiliser, vegetable oil, olive oil to mention a few, are issued by the Ministry of Industry and Commerce.
