Cheap imports costing Zim $120m annually

Bus1Tinashe Makichi Business Reporter
Zimbabwe could be losing about $120 million in potential revenue annually through relaxed duty on imported fabric and smuggling, the Zimbabwe Clothing Manufacturers Association has said.“Government is losing about $120 million in potential revenue and we cannot hold Zimbabwe Revenue Authority accountable for this because the fraud is perpetrated by our colleagues in the industry,” ZCMA chairman Mr Jeremy Youmans said.

“The local textile industry has been under threat from cheap imports.”

It is estimated that Zimbabwe is importing clothing and textile products at a value of at least $300 million annually. However, most of the importers were evading duty.

Mr Youmans said the ZCMA has formed a working group with ZIMRA which meets every month to address the challenges.
He said the textile and clothing industry continues to be one of the sectors hit by the growing influx of cheap imports which has negatively affected viability of the local industry.

The abuse of the SADC trading protocols has been on the rise as most goods are being purported to have been manufactured in the region yet some come as far as Asia or South America.

As a result, this is exposing local producers to unfair competition with foreign companies.

“Dumping” brings about unfair competition hence many governments take action against this practice to defend their domestic industries. The World Trade Organisations agreement under GATT (Article 6) allows governments to act against dumping where there is genuine “material” injury to the competing domestic industry.

To effect that, Government has to show dumping is taking place, calculate the extent of dumping (how much lower the export price is compared to the exporter’s home market price), and show that the dumping is threatening domestic industry.

The Competition and Tariff Commission is the country’s investigating authority for unfair trade practices. To operationalise this function, two statutory instruments namely the competition (anti-dumping and countervailing duty) (investigations) Regulations (2002) and the Competition (safeguards) (investigations) Regulations (2006) were put in place.

However, like, ZIMRA, the CTC is not capacitated to investigate and prove that dumping is taking place in Zimbabwe.
Mr Youmans said the problems facing distressed companies were emanating from inability to raise long-term capital to retool.

He said the clothing manufacturers have requested for a guarantee from Government to apply for funding.

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