Zimbabwe economy showing signs of distress

"I AM told we are now even importing women's underwear. How does that happen? If you are a husband and you see your wife buying underwear from the flea market, you would have failed." These are said to have been the words of Finance Minister Tendai Biti on 30 December last year when the importation of second hand underwear was outlawed.

The ban was a welcome development although it would be interesting to find out where men have been getting theirs. I play social sport and what I have seen at the change rooms cannot be described in words. The quality of life a people enjoy in any given country may be judged, to a reasonable degree, by the quality of underwear its citizens wear. Nay, the state of an economy may be judged by the quality of underwear found on many a washing line in our towns and cities.

Our economy has begun to show signs of stress and unless measures are taken to stem our appetite for increasing import tariffs, inflation will reach double digits this year. Often, import tariffs are used by governments the world over to essentially regulate trade in particular products or influence consumer taste. The past year has seen duty being re-introduced and in some cases introduced for the first time on items such as footwear, clothing, fridges and groceries. These are items that impact directly on the individual taxpayer.

Business leaders argue that local business needs to be protected from cheap imports through such protectionist import tariffs. From a textbook perspective, such moves are meant to foster the growth of specific industries within the economy. In our situation, the desired effect will always be a fleeting illusion to be pursued but never attained.  The correct approach must see the productive sectors being afforded the opportunity to get modern machinery and tools for their factories. What we are getting instead amounts to punishing us the consumers for having uncompetitive business operations in our thick. Tell me honestly why the price of Mazoe has almost doubled in 18 months.

The clothing chains are filled to the brim with imported merchandise not because we are shunning local products.  Local products are too expensive and besides people are buying from credit stores because they are being offered credit terms that are thought to be kinder to their depleted pockets.  Like members of the uniformed forces, you now find us with uniform underwear or in certain grave cases, nothing at all.

Yes, our Government is in financial distress and these import duties have sort of helped in raising revenue for the fiscus. Yes, business leaders are happy because they are benefitting from a reduction in competition but, what about the common man in the street that has to feed, clothe and send kids to school on a US$260 monthly salary? In the absence of Government subsidies who then is creating the demand for second hand underwear?

The increases in Government revenue are only temporary because in the long term local businesses will suffer terminal decline because of poor efficiency routines resulting from poor competition.  It is also quite possible that some of our neighbouring countries may retaliate by levying duty on our exports to them.

No one is advocating for the country to fling its doors wide open without restraint because that may cause irreparable harm. What is sensible in the circumstances is to make policies that make it possible for the citizens of this country to create national savings.

For instance, as a landlocked country without any known oil deposits, is our national fuel consumption reasonable? With every third person owning a car and no credible public transport system to talk about what policies has the Government put in place to help bring down the cost of fuel imports? And talking about motor vehicles, rumour has it that motor vehicle licences will now be renewable every three months. Why invest in queues again?

It is not good news to report that ZIMRA surpassed its tax collection objectives on account of increased tax collections from individuals. Now, if you take into account the fact that there has been token free tax threshold concessions by Government in recent times and that there has not been much  job-creation activities in the economy, you must then realise just how much of a personal burden our tax system has become.

Our tax system must encourage compliance with tax laws. Our tax system allows companies to take advantage of tax windows of opportunity and they call that tax efficiency. There are no such "obvious" tax windows for individuals. Wait a minute â€" there is.

The only items of clothing and footwear that are exempt from duty are those used and worn by the traveller during the course of his visit to the foreign land, right? It will not be long before you see people going across the border with tattered and torn clothes only to return immaculately dressed. It boggles the mind how those intent on replacing their tired underwear may pull off this one!

Yes Minister Biti â€" if you find my lady shopping for her lingerie at a flea market, it will be fair to say I would have failed in matters essential. You must agree with me then if I say this â€" should a man ever fail to buy even a small piece of mutton cloth to cover himself â€" his government will have failed him!

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Givens Hapadziwi is a Senior Manager at NMB Bank - Bulawayo.