August 26, 2011

Import duties drive up food prices, hurt poor

Barely a month after the Zimbabwean government reintroduced duties on imported food items such as cooking oil and maize meal to protect local manufacturers, the move appears to have backfired, making essentials unaffordable for low-income consumers. The government scrapped import duties on cooking oil, sugar, maize meal, meat, salt, soap and other basic goods in 2009 to encourage the flow of these commodities into the country after the emptying of shop shelves in the wake of hyperinflation.

A quick survey by IRIN revealed that the price of all basic commodities has shot up recently. Two litres of cooking oil which cost US$4 a month ago was up by almost a dollar; a bar of washing soap cost up to 80 US cents more; while margarine rose by 40 cents and imported chicken was selling at around a dollar more in some shops.

Tendai Biti, the finance minister, announced the reinstatement of import duties on basic commodities in July 2011. However, local industry remains depressed. John Mufukare, secretary of the Business Council of Zimbabwe, told the media recently that local firms had failed to achieve the 60 percent half year production targets due to financial constraints.

Meanwhile, Innocent Makwiramiti, a Harare-based economist and former chief executive officer of the Zimbabwe National Chamber of Commerce, put the blame squarely on local manufacturers. "We have observed that locally produced goods feature prominently in the list of commodities whose prices have gone up sharply. There is no reason why that should be so and the only explanation is that they are doing it for speculative reasons and out of greed," Makwiramiti said. He feared that some manufacturers, wholesalers and retailers would create artificial shortages by hoarding goods, thereby pushing up prices.
Welshman Ncube, the industry minister, promised investigations into the price hikes, which he described as "unjustified". "We will ask the Consumer Council of Zimbabwe, the Competition and Tariffs Commission and the Pricing Commission to look into the price hikes and establish if the emerging pricing pattern is out of speculation. We will take stern action against the offenders," he said. (IRIN)

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