Smuggling is so rampant that shoes that should sell for $5 go for $1, minister

Smuggling is so rampant in Zimbabwe that shoes that should sell for not less than $5 are going for $1, the Minister of Industry and Commerce Mike Bimha told Parliament.

As a result, he said, the government is setting up a multi-sectoral team to curb smuggling because the country’s borders are very porous. There is also rampant corruption at the border posts with people bringing in goods through the border posts without paying duty.

Bimha said that the setting up of the team had already been approved by the cabinet.

Responding to a question from Zaka Central MP, Paradzai Chakona, on what government was doing to curb the smuggling of goods which were being sold at a cheaper price than local goods thus killing local industry, Bimha said people were not just smuggling goods but some were coming through the official border posts and bribing officials to evade duty.

“We have duty applied on imported shoes and there is a certain amount of duty and an additional amount per pair which one has to pay for importing. However, you will find shoes being sold at the market at US$1 per pair when the additional amount over and above duty is US$2.50. If one can then sell a product for US$1 when you were supposed to pay US$5 all in all, it means that these goods are going through our borders without duty being paid,” Bimha said.

“What we have recommended as a Ministry to Cabinet is the setting up of a multi-sectoral team to look into this matter and that is an issue which we have presented to Cabinet and has been given approval. We are in the process of putting up this multi-sectoral team which will ensure that we inspect the goods which come through our borders.”

The minister also said the government was working on measures to protect local industry such as ensuring that cheap and poor quality products were not imported into the country.

“To support our local manufacturers, first of all, we ensure that we remove or reduce duty on imported raw materials in order to reduce the cost of production for our local manufacturers. If we do that, then they become competitive.

“Secondly, we raise tariffs or duty on those products that we can make locally in sufficient quantities. We are also in the process of engaging an internationally reputed firm which we will then make use of in terms of checking the quality of products that come into this country,” he said.

Q &A:

MR. CHAKONA: Thank you very much Madam Speaker. I would like to find out from the Minister of Industry and Commerce what Government is doing to protect local industries given the porous nature of our borders where so much imported goods are inundating our market. What is the Ministry doing to protect our local industry?

THE MINISTER OF INDUSTRY AND COMMERCE (MR. BIMHA): Thank you Madam Speaker. First of all, let me thank the hon. member for the question which I think is very pertinent in the environment that we are operating under. We would like to use the word ‘support’ as opposed to ‘protection’. We would want to use the word ‘support’ in the sense that protection pre-supposes more of protection for the sake of protection. We would like to support local manufacturers against cheap imports and in most cases, imports that are of low quality. How do we do it? We work with the industry in terms of ascertaining what we make locally in sufficient quantities to meet the local demand. I will give an example, if it is a question of poultry producers, we have to ascertain what our local producers, collectively produce. We also have an understanding of what we require in terms of demand as a nation and the result – which is the gap, is what we then allow for importation.

So, to support our local manufacturers, first of all, we ensure that we remove or reduce duty on imported raw materials in order to reduce the cost of production for our local manufacturers. If we do that, then they become competitive. Secondly, we raise tariffs or duty on those products that we can make locally in sufficient quantities. We are also in the process of engaging an internationally reputed firm which we will then make use of in terms of checking the quality of products that come into this country. Again, that is in line with what I said earlier on in this august House that as a Ministry, we are putting together a Bill that will support the existing institutions to do with quality standards and also to do with the needs of the consumers. So, by and large, we would like to support local manufacturers in terms of tariffs and in terms of supporting them in reducing tariffs on those imported raw materials. I thank you Madam Speaker.

MR. CHAKONA: Thank you Madam Speaker. I was basically referring to smuggled goods. There are a lot of goods that are coming into the country which are not paying duty, some of them are even coming illegally. For example, there are so many drinks that are finding their way into Zimbabwe which are being smuggled across our borders, especially from our neighbouring countries. That is the kind of protection that I was looking at to say, what is Government doing because these products are flooding our market. They are also coming in cheaper than what we are producing locally because the importers are not paying any duty. They are not doing anything in terms of paying what is supposed to be paid to Government on importation. They do not have proper documentation when coming into the country. So, I am saying to the Minister, what is Government doing to protect the local industries, in view of these grey imports that are coming in, so to speak. They are not paying duty and they are not doing anything. Our industry is exposed as a result and the products are also cheaper because they are not paying duty? I thank you.

MR. BIMHA: Once again, thank you very much for the question. The issue of smuggling is very real, it is an indication of so many things, it means that our borders are very porous. There is a lot of corruption going on because goods do come in and sometimes through the normal channels at the border, but no duty is paid. I think the examples given by the hon. member are quite valid.

I will give you another one, we have duty applied on imported shoes and there is a certain amount of duty and an additional amount per pair which one has to pay for importing. However, you will find shoes being sold at the market at US$1 per pair when the additional amount over and above duty is US$2.50. If one can then sell a product for US$1 when you were supposed to pay US$5 all in all, it means that these goods are going through our borders without duty being paid.

What we have recommended as a Ministry to Cabinet is the setting up of a multi-sectoral team to look into this matter and that is an issue which we have presented to Cabinet and has been given approval. We are in the process of putting up this multi-sectoral team which will ensure that we inspect the goods which come through our borders. Thank you Madam Speaker.

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