eBusiness Weekly
Industry refutes the allegations
Govt-Industry interface progressive
Golden Sibanda and Tawanda Musarurwa
Shortages of basic commodities witnessed across the country in the last few weeks, which have driven prices through the roof, were partly a result of deliberate acts by major suppliers to starve the domestic market, according to the Confederation of Zimbabwe Retailers that has come out guns blazing and vowed to expose the manufacturers it accuses of holding back key products.
CRZ insist will expose some “unscrupulous” manufacturers it claims are deliberately starving the market of commodities and has started compiling a list of producers implicated in creating the artificial shortages witnessed nationwide in the past three weeks for onward submission to the Ministry of Industry and Commerce.
Zimbabwe witnessed a wave of price increases across all sectors since the beginning of October on the back of souring foreign currency rates of mainly the US dollar on the parallel market that triggered almost a 300 percent spike in the value of most commodities.
Some products also disappeared from shop-shelves, including cooking oil with CZR, however, saying there has recently been significant improvement in supplies on the back of increased delivery of the Zimgold brand.
CZR claims some manufacturers withheld basic commodities, while others nicodemously re-routed them to regional markets, an allegations the industrial body, Confederation of the Zimbabwe Industries, refutes.
In an interview with Business Weekly, CZR president Denford Mutashu, confirmed some local manufacturers were behind some product shortages and rampant price increases, adding action was being taken.
“It is actually true that some manufacturers were holding onto products. We are currently working on compiling the comprehensive list. Already we know who is holding products and those who have not supplied since October 2. We have advised (the authorities) for visits to be made to those respective manufacturers’ warehouses,” he said.
This publication understands that major suppliers of cooking, except Pure Oil Industries, are deliberately holding back products, prioritising exports or selling only to local buyers with foreign currency.
These include a major supplier of bottled water in Workington, a flour supplier in Willovale, a whisky and wines supplier in Willovale, agricultural seeds producer in Eastlea, a major sweets and chocolates manufacturer, a leading biscuit manufacturer, the biggest
milling company in the country and a fledgling beverages maker.
Managers demanding kickbacks
Mutashu said so deplorable was the situation as some corrupt senior management in those manufacturing companies had begun demanding kick-backs for them to be able to release products to the retailers and wholesalers.
This, however, resulted in some retailers effecting the cost of corruption on the retails price of products to be borne by the consumers. Earlier on Monday, President Mnangagwa highlighted at an engagement with business leaders at State House that the Government was aware that some local manufacturers have been holding back products. The Government has since instituted a number of measures to curb such activities, namely the indefinite suspension of Statutory Instrument 122 of 2017 to allow for the importation of basic goods to supplement local production.
SI-122 is a trade policy restricting the importation of various goods.
Commodities that can now be imported include animal oils and fats (lard, tallow and dripping), baked beans, body creams, bottled water, cement, cereals, cheese, coffee creams, cooking oil, crude soya bean oil, fertiliser, finished steel roofing sheets, wheat flour and ice cream.
Those with free funds can also bring in jams, juice blends, margarine, mayonnaise, packaging materials, peanut butter, pizza base, potato crisps, salad creams, shoe polish, soap, sugar, synthetic hair products, wheel barrows, agrochemicals and stock feeds. Manufacturers panicked after suspension of SI 122 of 2017
Mutashu said within a week of the announcement of the measures, there was a notable improvement in the supplies of locally-manufactured goods on the market.
“We experienced improvement, especially when the measures were announced. We saw some panic and some manufacturers have started bringing products including those that last supplied the market on October 2.
“They have started bringing their products to the market, maybe in the fear that if they don’t do that there could be a situation where the foreign products will come through and take away the market from them,” he said.
Industry refutes allegations
CZI president Sifelani Jabangwe, on Wednesday said the industry representative body had not yet received reports of some manufacturers holding on to supplies for speculative purposes, challenging anyone with information to furnish his organisation.
“We would be glad to know the suppliers who have been withholding products so that we can make a follow up on them and understand their challenges,” he said adding that local industry was saddled with foreign currency shortages that affected production processes.
Major losers and winners of SI-122 suspension. The indefinite suspension of SI-122 has, however, not come without both praise and condemnation.
The biggest beneficiaries of the measure, as indicated by the CZR president, are obviously the retailers (who are expected to get constant stock) and consumers who will no longer have to bear the brunt of product shortages.
All things being equal, in the short – term (at least), the suspension of trade measure will lead to market equilibration as a result of improved product supply.
But on the other hand, the biggest losers could be the manufacturing sector, which was key in the introduction of the policy in the first place after raising consternation with the influx of cheap substitutes.
In a recent paper, analysts at researchers Equity Axis, highlighted the gains recorded by the manufacturing sector as a result of the policy.
“The policy thrust was, however, very visible and effective in terms of the scaling up of local production through induced demand. In the Confederation of Zimbabwe Industries (CZI)’s 2017 report, it was reported that production in volume terms across the manufacturing sector went up by 5 percent. Companies in protected sectors such as food processing covering products such as cooking oil, milk and bread evidently grew volumes to full capacity between 2017 and 2018. The growth was to some extent beginning to translate downstream within value chains especially in commodities with linkages to manufacturing,” said the analysts.
