Zimpapers Logo

Consumers are being forced to pay through the nose for locally-manufactured products like cooking oil, something Finance Minister Patrick Chinamasa (above right) must look into

Lloyd Gumbo Mr Speaker Sir
Finance and Economic Development Minister Patrick Chinamasa came up with a number of fiscal measures when he presented the Mid-Term Fiscal Policy Review re-cently.

Most of the measures are meant to protect the local industry in the face of competition from neighbouring countries.

Granted, Zimbabwe cannot afford to be a net importer of South African merchandise when we are producing most of the agricultural products.

As such, it is vital that for our economy to improve, there is need to give value to local production whose downstream benefits in terms of employment creation will go a long way in addressing some of the challenges facing the country.

There are indications that the country is importing cooking oil worth more than $220 million annually yet we have local producers.

This money, if it were to be spent on local equivalents, would boost the struggling industry.

But the question is why should our locally-produced cooking oil be so expensive compared to imported products?

While liberalisation is good for getting value for money, there is need to make sure our Gross Domestic Product is at acceptable levels.

Mr Speaker Sir, there is an even serious demand that consumers must be protected from the local industry especially when the economy is not doing well.

In our case, our policy intervention must not end with just protecting the local industry from foreign competition, it should go further to protect consumers from local the industry who may see their protection as a licence to rip off already struggling citizens.

It is not the first time that Government has attempted to protect local industry.

Former finance minister Tendai Biti during the inclusive Government era came up with a number of interventions to protect the local industry especially on groceries but this went to nought as the local industry then raised their prices knowing they had a monopoly over the local market.

Often, he would be forced to reverse this decision so that local prices would come down.

The high prices charged by local industry have always been blamed on the high cost of production, which is a fact, but that is what must be addressed first.

Consumers cannot be punished for that.

Chairperson of the Parliamentary Portfolio Committee on Finance and Economic Development David Chapfika raised pertinent issues while debating the review last week.

“The balance of payments deficit of $1,8 billion is a cause for concern. We cannot afford to continue exporting jobs while our unemployment rate is very high.

“While we applaud the minister for the measures submitted to boost local production, there is need to create a conducive environment for local production.

“Challenges of power cuts, water supply and obsolete and antiquated equipment, among other challenges, must be addressed in order to help boost local production,” he said.

What is important is for us to first address challenges facing our productive sector.

For instance, industry is forced to cut down on production or use generators because of the incessant load shedding thereby increasing the cost of their products.

On revenue measures, Chapfika said: “I applaud the minister for putting in place measures to boost revenue; however, I must hasten to implore the business community to desist from profiteering.”

He added: “The increase in customs duty on mobile handsets and motor vehicles is welcome in the circumstances but worrisome. I feel this will continuously burden the poor people who are struggling to make ends meet.

“The motor industry is currently operating at below 1 percent of installed capacity and therefore cannot meet the local demand. Instead of coming up with such measures, (these) should have come into effect when the local production has improved to a significant level.”

Biti had something to say as well: “All the revenue measures that Minister Chinamasa carried out, the tax measures that he put are actually intended to take money out of our pockets.

“He puts duty on mobile phones, air-time and basic foodstuffs which are all effectively further pauperising us. You cannot withdraw; you cannot source money to be taken out of your pockets.”

Consumers will only buy something that is comparatively cheaper.

What is clear is that without proper mechanisms in place to monitor the behaviour of our local industry, prices for basic commodities will go up and at the end of the day, it is the consumers who will suffer.

If it means that Government has to impose price controls on local industry, so be it to protect consumers who do not have disposable income given the economic hardships the country is facing.

Yes, it is a noble cause to protect local industry but their prices have to be competitive and should not seek to rip off already struggling consumers.

It is gratifying note that Government is alive to the fact that local industry, if protected, can abuse the protection.

Said Chinamasa: “They can abuse it in many ways such as hiking prices, putting on the market shoddy quality of goods but so far, those which we have targeted, we have not observed any increase in prices and also the quality has not deteriorated.

“This is an exercise that we have been doing for over a long period of time and we are very clear which producers deserve our protection and which do not.”