Opinion / Local
'Zimbabwe to become a supermarket of imports'
11 Jun 2022 at 09:33hrs | Views
GOVERNMENT'S decision to suspend duty on imports of selected basic commodities such as rice, flour and cooking oil for six months will cripple the country's already ailing economy and industries, local research think-tank Akribos Research Services has said.
In its May review, Akribos said scrapping of duty on selected products would have severe consequences such as job losses in the manufacturing sector.
It said it would negatively impact productivity of industries, which have already suffered losses caused by the COVID-19 pandemic.
In 2021, industry registered a new 10-year manufacturing capacity utilisation of 56,25%.
"Locally-produced goods are likely to lose shelf space to foreign products and jobs in the manufacturing sector will come under threat as sales volumes drop," the Akribos report read.
"The government directive can be viewed as an attempt to mitigate any potential shortages of basics and to control prices through foreign competition in the economy."
"In addition, the trade deficit is likely to further widen given that the US$ continues to appreciate against Zimbabwe's major trading partners' currencies like the South African rand and Chinese yuan as our imports become cheaper and exports more expensive.
"In this highly likely scenario, Zimbabwe will once again become a supermarket for foreign products. We encourage the government to continue to promote the local producers as economic fundamentals are still fragile," it
said.
Akribos said in May, the local currency depreciated against the US dollar by 25% officially and 85% on the parallel market, marking the biggest decline since the beginning of the year.
It also said election spending in Zimbabwe would fuel inflation.
"At least 14 African countries depend on Russia and Ukraine for more than half of their wheat imports, while almost half the continent depends on imports for more than a third of their wheat."
"In addition, election spending in Nigeria and Zimbabwe is also expected to contribute to trigger high inflation for much of the rest of the year," Akribos added.
In its May review, Akribos said scrapping of duty on selected products would have severe consequences such as job losses in the manufacturing sector.
It said it would negatively impact productivity of industries, which have already suffered losses caused by the COVID-19 pandemic.
In 2021, industry registered a new 10-year manufacturing capacity utilisation of 56,25%.
"Locally-produced goods are likely to lose shelf space to foreign products and jobs in the manufacturing sector will come under threat as sales volumes drop," the Akribos report read.
"The government directive can be viewed as an attempt to mitigate any potential shortages of basics and to control prices through foreign competition in the economy."
"In this highly likely scenario, Zimbabwe will once again become a supermarket for foreign products. We encourage the government to continue to promote the local producers as economic fundamentals are still fragile," it
said.
Akribos said in May, the local currency depreciated against the US dollar by 25% officially and 85% on the parallel market, marking the biggest decline since the beginning of the year.
It also said election spending in Zimbabwe would fuel inflation.
"At least 14 African countries depend on Russia and Ukraine for more than half of their wheat imports, while almost half the continent depends on imports for more than a third of their wheat."
"In addition, election spending in Nigeria and Zimbabwe is also expected to contribute to trigger high inflation for much of the rest of the year," Akribos added.
Source - NewsDay Zimbabwe
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