BALANCING BETWEEN PROTECTION OF LOCAL INDUSTRY AND FREE TRADE AGREEMENTS IN ZIMBABWE IN THE POST COVID 19 ERA.

Zimbabwe has faced innumerable challenges on its quest to recapitalize its local industries. The Confederation of Zimbabwe Industries (CZI) Manufacturing Survey notes that the industry capacity utilization fell by 11.8 % to 36.4% in 2019 from 48.2% in 2018. There was a further decline in 2020 due to COVID-19 devastating effects which has already saw contraction of developed nations’ growth projections.  The reduction in capacity utilization comes with costs to both the government and the public as there will be losses in revenue, increased unemployment rates, growing levels of poverty and a decline in exports volumes resulting in further straining of already shortages of foreign currency. This will not be good for the economy and national security. Zimbabwe has limits in terms of available options and has to adopt the most uncommon protectionism  and face the backslash from both internal and external stakeholders.  

Polices papers and drafts  have been written and brought forward to the attention of policy makers by business organizations, academics and other stakeholders  on ways mechanisms which can be adopted to restore capacity utilization in the industry. Efforts in past guided by full market liberalization have failed to inspire the confidence in the markets and the country has remained a net importer facing myriad foreign currency challenges. Policy initiatives adopted by the authorities have failed to address the real issues as most of them have been reactionary and addressing symptoms.  As the local industry continues to collapse with cheap imports flooding the local markets, the business voices remain vocal as they try to spin the fortunes of the country. Businesses needs policy support and they have to  function. We have to protect the industry through policy as leaving it to supranational actors has proven ineffective.

In the past the adoption of Statutory Instrument 164 of 2016 which was reapeled  by SI 122 of 2017 , which  was viewed by Zimbabwe trading partners and cross-border traders as a catastrophe managed to support the revitalization of some industries and an increase in industry capacity utilization was noted. The letdown was on the porous borders which allowed continued illegal importation of goods. The measures taken by the government through the Ministry of Industry and Commerce were in order as they have applied and still are used even by developed countries.

Zimbabwe as a signatory to varied bilateral and multilateral trade agreements promoting free trade, was subjected to scrutiny and points of violation were raised. Zimbabwe is a member of the Common Market for Southern and Eastern Africa (COMESA) Customs Union and Southern Africa Development Committee SADC Free Trade Area and soon will join the rest of Africa in the African Continental Free Trade Area (AfCFTA).

The debate by scholars and industrialists has centered whether the country can adopt protectionism in the era of proliferation of free trade areas. Zimbabwean case is a peculiar case which requires  policy actions which addresses its internal challenges. As much as the world is liberalizing the markets, there are  still grounds for Zimbabwe to invoke protectionism to ensure that key challenges are addressed. These challenges include continued loss of jobs due to cheap and unregulated imports, decline in state revenue, threat to national security due to political instability among others. Zimbabwe has reasonable grounds to approach the regional economic communities and table its issues and how it intends to address them. The membership to these interstate organizations should not be a barrier to enhancing local industry capacity. Without a sound local industry Zimbabwe will remain at the mercy of its neighbors as we are turned into a supermarket with large amounts of foreign currency leaving the country for finished goods.

If the US can opt for protectionism and suspend trade agreements, it means there is an option for that even in our trade agreements. Its high time nationalism and protectionism comes first in Zimbabwe industrial policies.

Zimbabwe needs to adopt a strong stance against the unnecessary and luxurious importations and this is where I think the Competition and Tariff Commission (CTC) and the Ministry of Industry and Commerce have  let down the industry and the public at large. With its powers in the Competition Act (Chapter 14:28) the CTC needs to invoke some of the legislation to ensure the local industry is supported and protected.

Competion Act Sect34B In this part—

“assistance or protection”, in relation to local industry, includes—

(a) the raising of tariff charges on imported commodities or services that compete with commodities

or services provided by local industry;

(b) the lowering of tariff charges on imported commodities or services that are used by local

industry;

(c) the implementation by the Government of legislative or administrative measures for the purpose

of countering unfair trade practices;

(d) the conclusion of arrangements with any other country for the benefit of local industry;

(e) the implementation by the Government of other legislative and administrative measures that

may, directly or indirectly, assist any person to undertake any gainful activity for the benefit of

local industry.

“local industry” means the persons who in Zimbabwe are engaged in the business of producing or providing,

otherwise than by importation, commodities or services for consumption in or export from Zimbabwe,

and includes any class of such persons;

 The law is clear and we have to save an economy from total collapse. We cannot hide behind these free trade areas which have proven to be costly as European Union is battling with the Brexit and unknown future. The continued influx of cheap imports has been indirectly supported by the inaction from the regulatory authorities as few people have continued to milk down the country at the expense of the public and government. The sign is clear that when nations are faced with serious challenges they look inside and protect their sovereignty as shown during the implemented lockdowns across the globe. It’s high time we adopt policies which support our own industries. We cannot ignore the devastating effects lying ahead post COVID 19. The time is now to act and the CTC has to come out collaborating with all stakeholders as industry is given the preference to come up with realistic and time framed goals and objectives. Protectionism is the way to go and it’s no longer business as usual. Zimbabweans has to come out stronger from the COVID-19 pandemic.

There is no other way except to build the local industry and protectionism is the way to go. We have to have an industry at all cost. we have entered the era of nationalism by default and it requires action pronto.

Chiukira Levious is a Customs and Trade consultant with Gleam Consultancy

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