Local washing powder and toothpaste producers are on the verge of shutting down their operations due to stiff competition from imports, this publication can report.
On April 14 this year, the Competition and Tariff Commission (CTC) received a request to protect Merken Group from surging imports. While the CTC was still in the process of its investigations, the Government liberalized the importation of toothpaste.
Merken is the only producer of toothpaste in Zimbabwe.
Toothpaste is among the products recently exempted from paying duty in a move the Government said was meant to stabilize prices and ensure uninterrupted supply.
The company only enjoys a mere 2 percent of the market share while 98 percent is held by imported brands. The company was accorded National Project Status by the Ministry of Finance and Economic Development following recommendations from the Ministry of Industry and Commerce after the closure of Colgate Palmolive.
“Therefore the liberalization measure is likely going to lead to closure of the local entity since its already failing to compete with imported products,” said a joint report by CTC and the National Competitiveness Commission on recent price increases.
“This exposes the country to overreliance on imported toothpaste a situation which can be unsustainable in the future.”
The report also said the country’s washing powder manufacturers that have been complaining about intense import competition.
The washing powder manufacturers have been in the process of requesting a remedy due to the threat imposed by imported washing soap.
“The implication on other products might not exactly mirror the case of toothpaste. However, there is no doubt that increased import competition will likely lead to a reduction in local production…and will reduce capacity utilization levels of the local industry,” the report said.
Products such as cooking oil, rice, and salt are unlikely to be affected since they are largely imported. Again, in the case of both cooking oil and salt, their US dollar prices are way cheaper than current prices in the region and in particular South Africa.
According to the report, the scrapping of duty on selected commodities will likely reverse the gains registered over the past two years. It added the impact of the current measures needs to be looked at from an industrial development perspective.
“Ever since Government liberalized the importation of basic commodities, it was followed up by measures to restore back duties to protect local industry from collapse. The high import dependency on critical raw materials by local manufacturers means that they are likely to compete with the same companies that supply them with raw materials in the market for finished goods,” said the report.