Buy Zimbabwe campaign: Facing the realities

Terence Zimwara

The Buy Zimbabwe lobby continues to struggle in making headway in as far as halting the appetite for imports is concerned. If anything the results on the ground seem to suggest that few people are taking heed of the Buy Zimbabwe message as the soaring balance of trade deficit will attest.

According to Zimstat the country’s official statistics body, Zimbabwe’s trade deficit has continued to widen reflecting a relentless appetite for foreign products. In August 2013 the amount of imports topped $704 million while exports were less with a value of $283 million.

In fact that has been the trend throughout the whole of 2013 with the overall deficit currently at $3 billion according to the last figures released and some are focusing that it will reach $4 billion by year end (2013).

It would seem there are a few takers for the Buy Zimbabwe initiative and this is in spite of this lobby receiving generous space in national media and support from government.

So the question is why is the lobby not having an impact in the mind of the consumer? What is it going to take to alter the perception of the average consumer towards the quality of local products? Or is it really about perception?

Obviously the first factor that local producers have to deal with is the issue of cost. Locally produced goods are in most cases expensive and given the dire economic situation consumers are justified in their preference for cheaper imported products.

 Local manufacturers face a host of challenges and these inevitably reflect in the final cost of their products. The country’s largest industry representative body, Confederation of Zimbabwe Industries (CZI) acknowledges that the odds are heavily staked against local producers.

In a submission to parliament last year, CZI identified the lack of access to long term affordable capital as one key factor affecting local companies. Since dollarisation in 2009, it became clear that the economy needed long term and cheap credit to help revitalize local companies.

Plant and machinery that became obsolete during the period of economic decline needs to be changed yet in the absence of a lender of last resort and the use of foreign currency as legal tender, the state has not been able to influence the direction economy.

However, the CZI submission also touches on other issues that it believes contribute to this quagmire. CZI believes the Zimbabwe labour market is highly inflexible and high labour costs that companies incur are not in line with productivity.

The fast developing economies like China and South Africa all have labour markets which are flexible to some degree. Flexible labour markets allow companies to hire labour only when needed and when there is no demand for labour workers are laid off easily without the companies facing enormous retrenchment costs.

Of course the issue flexible labour and reforming the labour is a controversial subject on its own where sharp differences exist between employers and workers.

The CZI also identifies another factor which the Buy Zimbabwe campaign should be focused on, the abuse of certificate of origin and the porous nature of the border points.

A certificate of origin is an international trade document that has to be completed by an exporter or its agent and certified by an issuing body. It attests that the goods in a particular export shipment have been wholly produced, manufactured or processed in a particular country.

The CZI alleges that SADC and COMESA certificates of origin are being abused to bring in goods of other countries into Zimbabwe.

 Abuse of such certificates allows goods from countries that do not qualify for reduced tariffs to find their way on the Zimbabwean market without paying the relevant custom duties. CZI says this creates an unfair advantage for imported goods against locally produced goods.

CZI recommends an increased budget allocation to Zimbabwe Revenue Authority (ZIMRA) specifically to fund investigations into such abuses.

This should become self funding over time as the penalties from culprits who have been caught will pay for the investigations.

Major retailers however seem to be singing from different hymn book if the recent statements by OK Zimbabwe boss, Willard Zireva are anything to go by.

Speaking at a results briefing late last year, Mr Zireva told analysts that while his company supported the Buy Zimbabwe campaign in principle that did not mean OK Zimbabwe was going to compromise on quality.

In fact OK Zimbabwe has maintained a ratio of 65 percent imported merchandise to 35 percent locally produced goods. OK Zimbabwe argues that most local producers lack the capacity to supply it and this forces it source from outside the country.

In addition there is the issue of ‘quality’ of local products when compared with imports, retailers are not convinced that local products now match imports on quality. This is perhaps where Buy Zimbabwe can work with local producers and the retailers to find ways to improve the perception of local products.

 If locals perceive locally produced products to be of inferior quality then it will not matter that local companies improve their technology or packaging. Consumers will still not buy and it is in that context that Buy Zimbabwe needs to be supported.

However this lobby should not try to influence government to impose penalties on imports just to prop up inefficient local producers.

 Lately there has been an increase in noise by those that advocate for protectionism yet they conveniently forget that the country has signed multiple free trade agreements and cannot hike tariffs without facing repercussions.

Dealing with the trade deficit is not going to be a walk in the park, it will take genuine effort, painful decisions and it will take time. These efforts have to begin now otherwise the economy risks collapsing again as the continuing liquidity problems already show.