GoZ Removes Duty on Basic Goods as Rand Slumps
The fall of the South African rand to a three-year low of ZAR19,14, against the dollar means basic commodities in that country are even more affordable than on the domestic market.
FINANCE minister Mthuli Ncube has removed duty on all basic commodities to combat the rampant price increases in a slew of desperate measures to save the collapsing Zimbabwe dollar.
Over the past two months, the Zimbabwe dollar has plummeted to $2,700, against the United States dollar from about $1,200. Officially, over the same period, the Zimbabwe dollar fell to $1,222.27, against the greenback as of yesterday, which is a depreciation of just over 25%.
Local businesses have responded by raising the prices of goods and services to maintain the value of their products and offerings, which has seen a massive spike in prices.
This has also led to the erosion of wages as families are now facing galloping school fees, rising prices of basic commodities, healthcare costs, and rentals. In response to the crisis, Ncube announced a cocktail of measures yesterday to save the local currency and curb price increases.
“In order to enhance the supply of basic goods to the public, all basic goods will no longer be subject to import licences, and will also come into the country free of import duties and taxes.
According to insiders, the move is supposed to force local players to reduce their prices owing to the threat of cheaper imported goods mostly from South Africa followed by Zambia and Mozambique.
Further, with the fall of the South African rand to a three-year low of ZAR19,14, against the dollar, basic commodities in that country are even more affordable than on the domestic market.
Reports from South Africa suggest that its currency is expected to fall even further if allegations that the neighbouring country sent a shipment of arms and ammunition to Russia to support its war on Ukraine are corroborated.
Confederation of Zimbabwe Industries chief executive officer Sekai Kuvarika said the measure would be catastrophic to the local industry.
“The other measures they have put are good but this measure on imports, where it is problematic is that they are saying these goods should come duty free, when the (local) manufacturers of those goods are paying duties and other taxes and other regulations in the business environment to produce the same goods.
“So, it unevens the playing field. The import bill is also likely to balloon and maybe demand for forex will increase.
“There are no shortages of basic commodities. Giving stabilisation a chance is the best approach, if shortages then occur then maybe this could be necessary. Right now it is not, in fact it is counterproductive.”
Ncube scrapped the 15% surcharge.