Zimpapers Logo

Joram Nyathi
THE government has recalled import permits for some fresh produce. It was reported that the reasons for the recall included the fact that the imports were being abused, with counterfeits being used to import products which were readily available on the local market. The effect of these illegal imports was to deprive the revenue authority of levies and tax while local producers were being starved to death.

The reaction to government’s announcement was vintage Zimbabwean: local producers can’t meet demand; standards are poor; goods produced locally are too expensive; it’s all going to backfire.

This shows that we have a long way to go, a long way to learn and a long way to fully grasp the gravity of our economic situation. What was announced by the government is not even a ban on imports but our pro-imports brigades are already screaming murder.

The government needs to take a policy which might prove to be extremely unpopular at first but which is probably the only one capable of saving scarce foreign currency and grow the economy. There is no rocket science involved in the policy beside the courage to confront reality: does Zimbabwe need to import anything? What? And how much of imports?

There has been very little movement in the implementation of the ZimAsset economic recovery blueprint because “we don’t have financial resources” is the popular excuse, and the solution, so we are told, is to rethink the land reform and indigenisation and economic empowerment programmes to “attract foreign direct investment”.

While the excuse, that we don’t have financial resources is plausible, the solution, that we reverse the land reform, is inconceivable to the extent that it seeks to take Zimbabwe back to the colonial economy.

To me, part of the solution to financial constraints or “liquidity crunch” is for Zimbabwe to immediately close its borders and institute its own austerity measures on local products and foreign currency. And those austerity measures are the antithesis of what the IMF would want. While it is vital to contain government expenditure, retrenchments only worsen the plight of our perennially underpaid civil servants.

Reports show that just before June last year, Zimbabwe lost close to $1 billion in foreign currency. Trade figures show that we export around $4 billion while importing over $7 billion worth of goods, $4,1 billion of that attributed to government imports. Only a small percentage of our imports are used for manufacturing. On the contrary, we export expensive foreign currency to bring in second-hand goods.

This week, Zimra Commissioner-general Gershem Pasi revealed to parliament that travellers from Zimbabwe were allowed to take as much as $10,000 per trip per day. I don’t know if we have limits on trips a person can make per month. Suffice to say this is reckless waste.

When people take out foreign currency to go and buy cooking oil or biscuits or washing powder, all of which are locally available, it means we are not only exporting a scarce resource which doesn’t automatically return because it’s not ours, we are also depriving local industry of a market and purchasing power, and costing our children potential job opportunities. We are boosting other countries’ economies while we complain about lack of employment creation capacity. We are undermining the spirit of self-reliance envisaged in ZimAsset.

There are those who cannot sacrifice a little for long-term economic recovery. They complain about the poor quality of local products. Let them indulge their perverted tastes at a cost in the form of prices and special tax bracket. The government can create special economic zones where those who can’t consume local can go and spend their money on imports.

My point is that we need to strike a balance. We can import just enough to satisfy some outlandish tastes while limiting the larger market to local products. Product quality comes from practice.

Instead, by rushing to import quality, we are turning our industrial space into warehouses for foreign goods while we deprive our producers of the necessary market and resources to acquire new technologies to make them competitive.

Everyday one reads stories of companies shutting down. We read about declining capacity utilisation. There are grim tales of breadwinners being retrenched.  When you ask about the causes, these seem beyond us. We need foreign investors, otherwise we are doomed.

But that’s not always true. Companies shut down in part because we are irresponsible as citizens. There are many companies which have goods but we deny them our money, preferring instead to buy foreign. By extension, capacity utilisation must necessarily decline if there is no market for the goods. A company cannot retain employees who produce goods which have no buyers. Capacity utilisation responds to, and is spurred by market demand.

And the Zanu-PF government is not doing anything to spur demand for local products. It is doing nothing to plug the outflow of foreign currency. Zanu-PF won last year’s elections but is colluding in rigging the economy by letting people take out foreign currency at will while starving local industry, including our SMEs.

Zanu-PF is complicit in the strangulation of the economy. No amount of foreign direct investment can staunch the haemorrhaging in the foreign currency market. Painful measures are needed and that should not sound like rocket science for a party which has just won an overwhelming mandate to run this country.

It is criminal negligence that the government allows people to take across the borders as much foreign currency as they want while they bring in cheap substitutes for what is produced locally. Why can’t the 75 percent local content policy in music apply to other products?

Why are our MPs and ministers so eager to support already vibrant Japanese and American automotive industries while leaving Willowvale Mazda Motor Industries, Quest and others comatose? Who should buy our products if we shun and despise them?

Buy Zimbabwe should come alive. There is need for a vigorous campaign. People must ultimately appreciate that each time they buy a foreign product, they are depriving their child of a job tomorrow.

Exporting companies not only under-invoice but also make a show of remittance while the big money is stashed away. Here we are talking of companies exporting unprocessed minerals, in the process exporting potential jobs while we sell cheap. Nobody appears to take seriously the government’s call for value addition and beneficiation of minerals such as gold, diamonds and platinum. ZimAsset is not a priority. Its endorsement at public forums is no more than posturing — political correctness.

Zimbabwe boasts the second largest platinum reserves in the world after South Africa. Why can’t we have a refinery here? And when the government recently proposed a 15 percent levy for the export of unprocessed platinum, it was our own Chamber of Mines which complained that this amounted to “punishment”, even as it acknowledged in the same breath that prices of raw minerals were falling sharply.

And the government is too timid to act decisively.

Enter newly-listed Padenga Holdings. They run a lucrative crocodile farming business and have been resourceful to a point where their reptiles now feed on vegetarian pellets. Last year, they claim to have sold 42,000 skins to tanneries in Europe, mostly France. These sell for an average $550 each. Good bucks! That’s until you read that these skins are used to manufacture handbags, belts, shoes and watch straps for celebrities and others.

After the white man has woven his magic, the crocodile skin from poor Zimbabwe turns up at boutiques in London, Tokyo, Berlin, New York at a princely $40,000 as a handbag!

We are content to sell the raw material for just $550! Value addition is for Europe.  After that Chigovanyika you must sell 72 skins to buy back what you sold for $550. And we keep wondering why Africa has continued to slide back since the end of colonial rule!

It’s the same with diamonds, platinum, gold, chrome, iron, black granite, university graduates.

Banks also are not doing enough to attract depositors. They are happy to mourn about the liquidity crunch. Those who walk through their doors uninvited are penalised for entrusting their money with the bank. If Small and Medium Enterprises Minister Sithembiso Nyoni’s assertion is even half true that $7 billion is circulating in the informal sector, why can’t banks make themselves trusted custodians and conduits of that money?

SMEs offer a great opportunity for cooperation between the government, the private sector and local authorities.

They can work together to erect factory shells with proper ablution facilities for these people to operate from for a nominal fee. They can then be organised into groups or registered cooperatives to enable them to pool resources so that they improve workmanship, buy proper tools to produce better products.

Most of our schools don’t have decent furniture anymore and many boarding schools still use old metal frames as beds. These schools can be the trial markets for beds produced by SMEs before venturing into the formal sector and regional exports.

The biggest scandal on the foreign currency front is this: foreigners from the region are reportedly flooding our market with all manner of trinkets to earn the much sought-after United States dollar. Corruption has made our borders so porous that a span of six elephants pulling a wagon of goods can slip through Machipanda or Beitbridge or Chirundu or Forbes border posts undetected. There are apparently no limits to how much forex these elephants can take out on their return journey.

We are quick to fritter away the little foreign currency we earn, but want to borrow more from those who appear to gloat over our distress signal.

Joram Nyathi is the Zimpapers Group Political Editor. E-mail him: [email protected]