Columbus Mabika
THE Government has taken a tough stance to curtail the influx of smuggled goods into the domestic market to protect local firms and industry from unfair competition, Finance, Economic Development and Investment Promotion Professor Mtuli Ncube, has said.
This comes amid the growing twin challenge of smuggled goods and counterfeit products.
Minister Ncube said, going forward, authorities would treat all alcoholic and non-alcoholic beverages and basic commodities, including refined sugar, detergents, and dairy products, as smuggled items unless the owner can produce evidence of customs duty payment.
Authorities have already rolled out a nationwide blitz targeting smuggled goods, the channel through which most counterfeits find their way into the domestic market. However, some of the imitations are being manufactured in local backyard industries.
Smuggled and counterfeit goods worth millions of US dollars have been seized since the authorities started the raids.
Smuggled commands significant demand among consumers given their low prices since they do not pay import duties or any taxes, which inflate the prices charged by registered or compliant traders.
By reducing demand for goods sold by registered or compliant operators, smuggled goods and cheap counterfeits cause viability challenges for affected companies or industries, resulting in their inability to meet statutory tax obligations, keep jobs or create new ones.
The affected companies or industries’ incapacity to pay their tax obligations also negatively impact the Government’s ability to implement public programmes such as building roads, rail, schools, and hospitals and equipping the public institutions with requisite resources such as medicine, nurses, doctors, teachers and police officers.
Apart from their potential negative impact on the economy and local companies, authorities say the illicit and smuggled goods pose serious health risks.
Minister Ncube revealed the latest measures against smuggled goods in a statement read on his behalf by the ministry’s chief director of economic affairs, Mr Joseph Mverecha while delivering a presentation titled “Macro Economic Stabilisation Polices” to participants of the Joint Command and Staff Course at the Zimbabwe Staff College.
He, however, noted the economy remains on a firm growth trajectory, although it faces several challenges including trade deficit, low fiscal revenue, unsustainable public wage bill and debt, energy and infrastructure deficiency, price instability and exchange rate volatility, lack of funding and growing informalisation.
Despite mounting headwinds, Zimbabwe is projected to register a six percent growth driven by a strong recovery in agriculture and strong performance of mining and tourism.
Most smuggled goods and counterfeit products are traded in the informal sector, which has negatively impacted fiscal revenue, the viability of registered companies and the manufacturing industry.
“Alcoholic and non-alcoholic beverages, dairy products, washing powder, detergents and sugar among others are now deemed as smuggled unless sellers provide documentary evidence that customs duty was paid for.”
To address informalisation, he said the Government has taken measures to level the playing field through various initiatives.
These include the introduction of a five percent withholding tax, payable to wholesalers and manufacturers to enforce tax compliance among unregistered medium to small enterprises.
The value-added tax registration threshold was reduced from US$40 000 to US$25 000 to promote formalisation.
Minister Ncube said the Reserve Bank of Zimbabwe established the targeted finance facility to provide affordable ‘Bare knuckle’ fight: Govt targets smuggling to protect industry working capital to the productive sectors of the economy, while Micro and Small enterprises are required to transact through point-of-sale machines and operate a bank account linked to the Zimbabwe Revenue Authority.
Minister Ncube said that given the persistent inflationary pressures, the Government had adopted a mix of tight monetary and fiscal policy measures that include interest rate adjustment, exchange rate management mechanisms such as forex auctions, and the gold-backed Zimbabwe Gold currency.
He said his ministry implemented fiscal consolidation measures to ensure disciplined public expenditure and reduce reliance on monetary expansion as a financing tool.
In the outlook, he said inflation and the exchange rate were projected to remain stable on account of tight monetary and fiscal policies.
Minister Ncube said since 2018, the Government had implemented a mix of policy adjustments and compliance measures to increase revenue collection and reduce fiscal deficits.
“The implementation of these revenue enhancement measures has played a crucial role in substantially reducing the budget deficit that has been a challenge to the economy for years,” he said.
Minister Ncube said the Government was advancing discussions with the International Monetary Fund on a new Staff Monitored Programme to stabilise the economy and support debt resolution efforts.
“The SMPs reflect our ongoing efforts to implement economic reforms and normalise relations with international creditors,” he said.
The minister gave an update on efforts to address the country’s infrastructure deficit, saying over the years, Zimbabwe had faced infrastructure challenges that include deteriorating roads, inadequate water and sanitation systems, unreliable energy supply, shortage of schools, hospitals, bridges and limited telecoms.
