Drug import controls laudable

Though we are not full advocates of protectionism, the introduction by Government of import controls on 23 medicines to save the local pharmaceutical industry is a commendable step towards stopping the importation of products that can be manufactured locally. Importation and smuggling of all manner of medicines risks jobs of more than 1 000 employees as their companies face closure due to competition from lowly priced imports.

Cheap imports and those smuggled through porous borders have an adverse effect of further curtailing a sector that is already hamstrung by many economic challenges.

It is sad to note that we have been importing locally manufactured drugs such as aspirin and caffeine tablets, among many others. Medicines are generally sensitive in nature and rampant importation and smuggling exposes the general populace to safety and health risks as some of the products are either expired or substandard.

Statistics show that Zimbabwe imports over $400 million worth of drugs annually yet its own pharmaceutical industry requires $80 million to recapitalise. If we could prioritise the local industry, we would be able to create prominent pharmaceutical companies using the highly skilled human capital the country boasts and in turn aid in creating employment and development of the economy.

As such we commend Government, through the Ministry of Industry and Commerce, for introducing import controls on the selected pharmaceutical products to save local industry and unnecessary waste of scarce foreign currency.

Against this background, it is important for Government to assess all the sectors of the economy with a view to protecting sectors facing similar threats from the influx of cheap imports.

Importing locally available products or goods that can be made locally, be they pharmaceuticals, grain or clothing, has the negative effect of reducing earnings for local companies.

When companies are faced with reduced profitability their response naturally is to scale down production, meaning the firms could be forced to lay off some workers. Since Government has introduced import control measures on selected medicines, it is important that more control and monitoring mechanisms are put in place to prevent smuggling, as unscrupulous businesses or individuals will try to evade formal channels.

This is because the domestic economy cannot afford sustained growth in imported products that can be manufactured locally when it is desperate to save industry from collapse.

It therefore calls for concerted efforts from all Zimbabweans to exercise the highest levels of patriotism towards efforts to turn around the economy by prioritising the “Buy Zimbabwe” campaign.

In an environment where structural reconfiguration has resulted in widespread loss of jobs, Zimbabwe cannot afford to fuel more job exports through the “foreign is lekker” mantra.

Because the economy has not recovered from the meltdown of the hyper-inflationary era, the country is still way short of the required liquidity to support meaningful economic activity.

Being Zimbabwean means that everyone exercises a measure of responsibility to protect not just the country’s sovereignty, but also economic well-being by making conscious decisions that promote growth.

We urge the pharmaceutical industry to take this as an opportunity to revamp their operations and improve efficiencies which will lead to the production of competitively priced goods. The major reason why there was an influx of imported products is that they are cheaper when compared to locally manufactured products.

Local companies must therefore work on ways to cut their costs to remain competitive. Protectionist policies cannot remain in force forever.

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  • fraser bitu

    As stated in the article, it seems a good move for the government to have import control on the 23 medicines which the country can produce. This should be important to protect home industries for sometime until they are large enough to achieve economies of scale and become strong enough to compete internationally.

    Currently, the pharmaceutical industry is experiencing import surges from various borders of the country, either formally or informally because our local prices are comparatively high. Import control is important as both the domestic industry is seriously affected and the protection is in the nation’s interest, thus costs to consumers should be less than benefits that would accrue to producers. Otherwise safeguard actions need to be temporary with the objective of facilitating industry adjustment to increased competition and demand for drugs. It is also preferable to use World Trade Organization – consistent safeguard actions which suggest that countries consider the impact of taking action on the economy as a whole including the poor as opposed to simply focusing on the affected industry. Actually this industry is too sensitive such that the public can be at health risks so the industry needs to quickly focus on recapitalizing since only $80 million is needed as a longer term solution against the $400 million taken out as a short term measure.

    The Ministry of Industry and Commerce should rather do public funding of the industry to meet international standards since it has skilled human base. Seeking aid from developed nations can also assist to improve infrastructure in the industry as some developed countries can assist

    Fraser Bitu

  • Englebert

    By Englebert Dzimbanhete

    In my opinion, the proposed ban on the importation of 23 medical drugs into the country is in complete variance with the World Trade Organisation’s Technical Barriers to Trade (TBT) of 1995. Article 2.2 of the TBT agreement of which Zimbabwe is a signatory to, stipulates that “Members shall ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade. For this purpose, technical regulations shall not be more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment would create…” The main justification by the government of banning the importation is merely on the basis of protecting the local companies involved in the production of the stated drugs. This is not acceptable under the TBT agreement as they are neither harmful effects of the drugs to human health nor failure by the drugs to meet the expected standards confirmed in the newspaper article. This is basically an unnecessary obstacle aimed at restricting trade. Moreover, as an economist I am interested in actions by the state that result in improved welfare for the entire society. Contrary, a critical analysis of the proposed move shows that the move is favourable only to staggering pharmaceutical companies of a failing economy of Zimbabwe. Reduced welfare on the party of society comes due to the regulation of the equilibrium price of the stated drugs by the forces of demand and supply opposed to the scenario where free trade would be allowed.
    The government needs to rethink and reconsider its position on this issue for the good of the populace.