JOHANNESBURG – On Tuesday, Zimbabwe lifted import duties on a range of basic goods – including rice, cooking oil, sugar, maize meal, milk powder and soap – for the next six months.
The move comes amid rising inflation, which reached 96.4% at the last count in April, as the Zimbabwean dollar continues to plummet against major currencies.
Officially the Zimbabwe dollar opened the year trading at Z$108 to the US dollar, but is now trading at Z$277 per US$1 on the recently introduced interbank market. On the parallel market, the depreciation of the Zimbabwe dollar is more pronounced – it has fallen from Z$210 to a US dollar at the start of the year, but it is now trading at between Z$420 and $500.
The suspension of duties will be in place for six months, starting on 17 May.
South Africa, Zimbabwe’s biggest trading partner, is set to benefit from the new measures, while the move may put more pressure on Zimbabwean industry.
Though operating under a multicurrency system, production in Zimbabwe is indexed to the US dollar and with the greenback strengthening, consumers are likely to choose imported products over domestic products.
Recently, Zimbabwean authorities said that locally-manufactured basic commodities now account for 70% of retail shelf space.
At the weekend, Finance Minister Mthuli Ncube said that the new measures are aimed at improving access to affordable basic commodities.
He highlighted the impact of war in Ukraine, and said that the government aimed to stabilise the economy, contain inflationary pressures, and restore the purchasing power of the local currency.
“Those with free funds are, with immediate effect, permitted to make use of these funds and other resources to import basic commodities,” Ncube wrote in a statement released Saturday night.
Earlier this month, Zimbabwe suspended bank lending for most industries to stem the decline of its local currency. It was alleged that some parties were borrowing money to speculate and undermine the local currency.
However, the Zimbabwean government quickly backtracked on the regulation after local companies couldn’t borrow what they need to buy raw materials and machinery. – Fin24