Zimbabwe could save $2 billion annually by reducing the importation of 40 percent of products coming into the country despite existing capacity to produce them locally, a special advisory committee set up by Government has said.
The committee was set up this year to look into the problem of imports and smuggled goods into Zimbabwe and the impact this has had on local industry.
It was also tasked to assess the capacity of industry to supply the market, industry’s competitiveness and recommend appropriate action Government should take.
Acting chairperson of the imports advisory committee, made up of experts from the private sector, Mr Masimba Marangwanda handed over the report of their findings to Industry and Commerce Minister Mike Bimha.
Minister Bimha also received a report from a similar special private sector committee tasked to look into Zimbabwe’s ease and cost of doing business, which have seen the country performing poorly on global rankings.
Mr Marangwanda said his committee came up with recommendations on industries that could have quick turnaround periods if imports are reduced.
He also said that the committee had identified industries that could be nursed back to viability within a period of two to three years through import substitution.
As such, sectors identified as having low hanging fruits or potential to turnaround in the short to medium term if imports were reduced included the food, dairy, grain millers, pharmaceuticals motor and oil industries.
“We also believe that we can save up to $2 billion through import substitution, the subsequent effect of local value addition and money multiplier effect,” he said.
He added that the savings could be channelled towards improving capacity of local industry, which has fallen to 39,6 percent from 44,5 percent in 2013.
According Finance and Economic Development Minister Patrick Chinamasa’s mid-term policy review statement, imports for the first half of the year were down on last year, but relatively remain high at $3 billion. Corresponding imports for last year were $3,9 billion.
Mr Marangwanda added that the committee noted that capacity utilisation could go up substantially in certain sectors of the manufacturing industry such as oil pressers, yeast, biscuits and soap producers if effective measures were instituted to reduce imports.
He also pointed out that there has been worrying increase in products that were being smuggled into the country and evading paying taxes in a development that negated measures to protect the local industry.
Against this background, he said it was not only critical to craft policies to protect industry, but to constantly interact with the private sector to understand its problems.
Meanwhile, chairperson of the committee on the ease of doing business Mrs Maureen Chitewe said that the country needed political will to institute reforms to improve its global ease of doing business rating.
“It is not the absence of knowledge, advice or technical expertise that lands our country in the current situation, but lack of will to implement reforms,” she said.
She said the committee had established that Zimbabwe’s failure to implement an efficient business environment was evidenced by lack of adequate important information to the public and entrepreneurs.
Mrs Chitewe also cited inconsistent and bureaucratic procedures to do business, poor systems that encourage lethargy instead of performance, obsolete work processes out of sync with global technology trends and lack of accountability and innovation among issues affecting the country’s doing business rankings.
“What we also noted is that when our country is being viewed and particularly against the background of poor rankings, we are viewed as one of the worst economies to invest in.
“The regulatory environment in Zimbabwe is characterised by systems and institutions that make it extremely difficult to attract foreign investment,” she said.
Zimbabwe was ranked 170 out of 180 countries on the World Bank’s 2014 ease of doing business rankings, having slipped two notches down from 168 in 2013.
The committee on the ease and cost of doing business concluded that there was no system of implementation or audit for initiatives undertaken in an attempt to improve the country’s rankings and that investors had a negative perception of Zimbabwe.
“Political will is critical after all is said and done. There is no need to keep forming committees, it is time to roll up the sleeves and do the work,” she said.
Minister Bimha said the findings of the committees would be taken to Cabinet for evaluation and, if approved, implemented to address the challenges identified.
“Be assured that Government will take seriously and look at what you (committees) have come up with,” he said.