Government moves to protect local industry

by | Apr 8, 2021 | Business, Local News | 0 comments

Hosia Mviringi

Zimbabwean industry which has endured a battering over the years from a coterie of Western sanctions and lack of foreign currency for retooling has been given a lifeline following gazetting of a Statutory Instrument 89 of 2021 to regulate imports of vehicles, sugar, and cement.

Under Statutory Instrument 89 of 2021, which takes effect on April 2, 2021, which can also be cited as Control of Goods (Import and Export), the Minister of Industry and Commerce has directed that second-hand motor vehicles that are ten years or older from year of manufacture, as well as sugar and cement, shall require a special import permit from the Ministry of Industry and Commerce.

This is in line with the government’s thrust to promote consumption of locally produced goods including motor vehicles and automotive consumables.

The country has sufficient capacity and appropriate expertise required to produce sugar, cement and automotive products for both local and export markets.

Announcing the 2021 budget proposal on 26 November 2020, Finance and Economic Development Minister Professor Mthuli Ncube proposed a ban on imports of motor vehicles ten years or older, as a way of encouraging the purchase of locally manufactured vehicles.

The decision to remove motor vehicles, sugar and cement from Open General Import Licence infuriated a lot of people, including those that may not even afford to import a car.

Many labelled Professor Ncube’s policies as anti-poor and anti-social, yet a look at it from close range reveals a host of advantages to the economy in general.

Import substitution bears immense benefits for the economy that include huge savings on foreign currency and employment creation.

Each time the country imports finished goods, it translates to donating jobs to producing nations and erosion of potential tax revenue from government coffers.

For example, according to government statistics, Zimbabwe spent US$1.3billion on vehicle imports between 2015 and September 2020. This amount of money would be enough to recapitalize all bus and car assembly plants and employ hundreds of Zimbabweans.

Older motor vehicles have a high emission rate which exposes the environment to pollution.

In addition, any car from major exploiting countries such as Japan presents a higher risk of radioactive contamination from the Fukushima nuclear disaster of 2011.

If the tap for second-hand vehicles is closed, this can attract new investment into the economy to close the gap left by second-hand cars, resulting in further economic growth and employment creation.

Local manufacturing of motor vehicles has a positive impact on downstream industries such as battery and tyre manufacturing, and a potential to boost the motor vehicle finance and insurance sub-sectors.

This law has been on the cards for a long time now, but lack of willpower and zeal to implement it scuppered the efforts in the older dispensation of former President Robert Mugabe.

In a Cabinet Circular number 16 of 2011, issued by the Office of the President and Cabinet, all parastatals, line Ministries, and government-affiliated entities were directed to purchase at least eighty percent of their vehicle requirements from local assemblers.