Finance minister Tendai Biti, in his mid-year fiscal review statement last month, announced that duty on basic commodities such as maize meal and cooking oil would be restored beginning of August.
He said for other food stuffs such as potato chips, baked beans and mixed fruit jam, duty would become effective in September.
The duty will range between 10% and 25%, while that on salt, rice and flour would remain suspended until the end of the year.
Biti said the move was meant to protect local industry against cheap imports but economists and consumers feel the decision was rushed.
Most people feel local industry does not have the capacity to meet demand and will resort to overpricing of basic commodities.
“We had so much faith in Biti because we thought he had the people at heart, but now his true colours are beginning to show,” said Masimba Muchati, a Harare school teacher.
“He has constantly said the country has no money, so where does he expect us to get the extra money to be able to afford the new food prices?” He said government appeared bent on reversing the little gains made by civil servants when they were awarded a modest salary increment in July.
Last month government gave civil servants a salary increase that saw the least paid employee getting at least US$300 a month, which is still far below the poverty datum line, estimated at over US$500.
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“In real terms, there was no salary increase for civil servants as all the money is being taken by the already increasing food prices,” said Chido Mashaya, another teacher from Chitungwiza.
A snap survey conducted by this paper indicated that two litres of cooking oil, which cost US$3,50 in July, now retails at between US$4,50 and US$5. Prices of the most affordable laundry soap jumped from US$0,90 to US$1,50.
Prominent economist Johan-nes Chiminya said considering that money in Zimbabwe was expensive and that industry had not used a fund set up for its revival, government’s decision to restore import duty on basic commodities was ill-advised.
“Not much can happen in the manufacturing sector if financing remains short-term and expensive and utilities are unaffordable,” he said.“Despite an outcry from local players in the manufacturing sector, the duty-free policy needed to be extended until production levels in industry had significantly improved.”
The scaling down of industry operations to nearly 10% in the last decade forced most consumers to rely heavily on imported goods from neighbouring countries.
However, the formation of the inclusive government and introduction of multiple currencies in 2009 saw industrial capacity utilisation increasing to 45%. Despite concurring that local production levels are not yet sufficient to meet local demand, manufacturers and the Confederation of Zimbabwe Industries (CZI) have been fiercely lobbying for the restoration of import duty on basic commodities.
The influx of cheap imports has created an unfair playing ground for local products which are facing high production costs.
After the collapse of commercial farming in the country, manufacturing companies have resorted to importing raw materials.
The quality of local products has also deteriorated over the years.
This has seen most consumers preferring imported products, which are of a better quality compared to locally produced consumer goods.
Use of obsolete machinery and outdated technology has been cited as the main reason for the production of low-quality products locally.
Consumer Council of Zimbabwe executive director, Rosemary Siyachitema said government had left consumers to the wolves while “we don’t know whether the local industry would be revived or not”.
She said although the move would not result in food shortages, the cumulative effects of price increases would be felt most among low income earners, who make the bulk of Zimbabwe’s population.
Grain Millers Association of Zimbabwe chairman Tafadzwa Musarara said his organisation had lobbied for the restoration of duty on maize meal to create favourable market conditions for millers.
“The aim of the imposition of duty is to level the playing field and discourage (and not ban) imports,” he said.
“Maize meal imports reportedly caused unprecedented job losses in the milling sector and negatively affected producer prices of maize. “The 10% duty imposed by the minister was consistent with the regional tariffs.
“In fact, the 10% duty on maize meal is the lowest in the region,” said Musarara who is also the secretary general for Affirmative Action Group (AAG).
