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Zimbabwe agricultural import permit ban disastrous

The announcement by government to cancel all agricultural import permits is a recipe for disaster which may lead to shortages and unjustified price increases, a latest market report reveals.

This development follows a directive by Agriculture minister Joseph Made last week that there was need to revise rules and regulations governing the importation and exportation of agricultural produce.

“All import permits have been cancelled,” Made said. “This is pending the return of the old permits to the ministry so that new ones have to be issued. The ministry will follow certain rules and regulations that have to be observed by the licence holders.”

However, financial group AfrAsia Zimbabwe Holdings Limited’s weekly report noted that Zimbabwe is currently a trading economy, importing more than 50 percent of its foodstuffs from the region and clothing from as far as China, India and Dubai.

Furthermore, it noted that there was no proper informed research on actual production of individual agriculture produce to make a conclusive decision.

“The move will likely affect consumers and is also contrary to the Sadc Free Trade Area’s Protocol on Trade of 1996 which clearly recommends for the elimination of non-tariff barriers (NTBs),” AfrAsia said.

“Zimbabwe’s move to introduce such a temporary ban on imports, imposition of additional import levies and other import controls are protectionist measures that restrict domestic market access.”

The financial group’s report said the policy announcement was against the World Trade Organisation (WTO) and Sadc’s call for reduction of trade tariffs and removal of NTBs for effective trade to happen.

“There is an increasing consensus among African policymakers that trade is a powerful engine for economic growth and development as can be learnt from South East Asia and the European Union,” read part of the report.

Apart from the liquidity crunch prevailing in the country, the agriculture sector has over the years failed to attract funding from the financial services sector as government has not come up with bankable leases to act as collateral.

Zimbabwe’s agricultural sector has been on a serious decline since the turn of the millennium and the country has been failing to feed itself after it embarked on a chaotic land reform programme in 2000 aimed at redressing colonial land imbalances.

The World Food Programme says more than 2,2 million people need food aid to avert starvation.

Already, the country is entering its 13th successive year of food shortages.

The country, which once exported food and was southern Africa’s bread basket, is now a regional basket case.

Last year, the country had to import more than 300 000 tonnes of maize from South Africa and Zambia to avert food shortages.

Figures from the Zimbabwe National Statistics Agency (Zimstat) showed that the trade deficit for 2013 widened to $4,19 billion from $3,6 billion in 2012, after the country imported goods worth $7,70 billion against exports of $3,51 billion on the back of an influx of imported foodstuffs.

On the other hand, the report stated that given the country’s current economic situation, without short term protection measures at this early stage of recovery, the economy may remain in the doldrums for a long time.

With reference to The Zimbabwe National Trade Policy running from 2012-2016, AfrAsia said there was need to impose import duty to protect industries that are trying to improve output so that they are not put out of business by foreign competition.

The country has a number of agricultural products such as potatoes, tomatoes and onions which local farmers can adequately supply provided they get sufficient funding and inputs.

“The current cost structure in the country is making local production less competitive compared to imported produce.

“This may call for short-term support to agriculture through capacity building to increase productivity and temporary selected agriculture produce imports ban,” it said.

However, such protectionist strategies needed to be time-bound in order to remove the risk of being abused and consumers paying for inefficiency costs as well as lack of innovation.

“There is need to invest more in the agriculture sector so as to improve productivity by making lease agreements bankable.

“The sector has failed to attract private investment due to lack of security and protectionist measures cannot be seen to do much in the absence of financial and capacity building support,” said AfrAsia.

The report recommended that the Brazil agriculture model should continue to inspire the nation that security of tenure, use of private funding and continuous improvements on efficiencies are the key drivers to making agriculture globally competitive.

Source – Zimbabwe Situation