Zimbabwe restricts imports to stem dollar outflow

Zimbabwe has restricted the importation of a list of basic goods, mainly from South Africa, Industry Minister Mike Bimha said on Wednesday. Bimha said in Harare that the aim was to protect local industries and stem the outflow of scarce dollars from the drought-hit economy. 

The minister added that importers of bottled water to furniture and canned beans to fertlisers would now have to apply for special licences and explain why they needed to. Other listed goods included building materials, steel products, cereals, potato crisps and dairy products. 

In the grip of its worst drought in a quarter century that left four million people facing food shortages, Zimbabwe was also running out of cash, forcing the central bank to limit bank withdrawals. Bimha said the government issued the temporary measures to protect struggling industries that were operating at an average 35 per cent capacity. 

“What we are saying is that if you had already imported your products before June 17, show us the proof and we will give you an import licence to bring the goods,” Bimha said. “But going forward, if anyone wants to import these listed products then you need to provide justification before you are issued a licence. “We want to ensure our industries increase their capacity.” 

Meanwhile, local companies welcomed the measures but economic analysts said it could cause shortages as the domestic industry struggled to increase capacity, with some firms using outdated equipment dating back to World War II. 

An executive at Olivine Holdings, which manufactures soap, canned products and edible oils, said the measure would allow the firm to raise capacity at a time it is installing a new 15 million dollar plant. “This should have been done gradually because the local industry is in a fragile state.

 “They will not be able to cope with demand which will lead to shortages,” John Robertson, a Harare-based economic consultant said. Zimbabwe could also lose significant revenues from duties as a result of the restrictions, at a time it was desperate for cash and had delayed June salaries for government workers by two weeks. Taxes charged on imports accounted for 21 per cent of the 725 million dolllars taxes collected by Zimbabwe’s tax agency during the first quarter of this year. 

A catastrophic 1999-2008 recession decimated Zimbabwe’s industries and Harare had increasingly relied on imports. 

The country’s trade deficit had, as a result, widened from 400 million dollars a decade ago to 3.3 billion dollars in 2015.