Struggling Zim slams door on food imports from SA to save US$

By: 
Reuters

HARARE, June 22 Zimbabwe has imposed restrictions on imports of a list of basic goods, mainly from South Africa, to protect local industries and stem an outflow of scarce dollars from the drought-hit economy, industry minister Mike Bimha said on Wednesday.

Importers of the affected products - from bottled water to furniture and canned beans to fertlisers according to the Official Gazette - will now have to apply for special licences and explain why they need them, Bimha told Reuters.

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 has left 4 million people facing food shortages, Zimbabwe is also running out of cash, forcing the central bank to limit bank withdrawals.

Bimha saids the government had issued the temporary measures on June 17 to protect struggling industries that are operating at an average 35 percent of 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 with a licence. We want to ensure our industries increase their capacity," added Bimha.

The measure will last six months but can be extended, he said.

Local companies cheered the measures but economic analysts say they could cause shortages as the domestic industry struggles to increase capacity, with some firms using outdated equipment dating back to World War II.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 measures would allow the firm to raise capacity at a time it is installing a new $15 million 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 is desperate for cash and has delayed June salaries for government workers by two weeks.

Taxes charged on imports accounted for 21 percent of the $725 million in 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 has increasingly relied on imports. The country's trade defecit has, as a result, widened from $400 million a decade ago to $3.3 billion last year. (Editing by James Macharia and Andrew Heavens)

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