Cooking oil producers hail punitive tax on imports, say only need short-term protection

Cooking oil producers hail punitive tax on imports, say only need short-term protection

By Kuda Chideme, HARARE, August 4 (The Source) – Zimbabwe’s cooking oil producers will be able to meet the country’s demand for edible oils by September as capacity utilisation in the sector is improving after government imposed punitive levies on imports, but an official said the protectionist measures should be temporary.

The country which has a monthly requirement of 11,500 metric tonnes of cooking oil has previously relied on cheaper imports mainly from neighbouring South Africa.

Confederation of Zimbabwean Industries (CZI) president Busisa Moyo on Tuesday told The Source that cooking oil production locally currently stands at 10,500 metric tonnes a month and would surpass local demand by September.

Government last week removed from travellers rebate grocery items, saying there was no justification for their continued import since the local industry was producing such goods.  For cooking oil, it raised customs duty to 40 percent and a 25 percent Surtax or $0,50 per litre, whichever is higher.

It also banned the importation of second hand clothes and shoes with effect from September 1 as part of measures to help resuscitate some critical sectors of the economy, but Moyo said the protectionist measures should be temporary.

“The industry needs such form of support until a time when the business environment normalises.  As it is we are saddled with a higher cost of production and we cannot compete but such a move will allow us to grow. It does not have to be a permanent move, maybe just for 36 to 48 months to allow us to grow,” said Moyo.

“For July government approved import permits to the tune of about a thousand metric tonnes but  with capacity utilization in the sector going northwards of 70 percent we think by September there will be no need for imports.”

Imports of cooking oil have over the past years contributed heavily to the country’s bill, with $41 million worth of edible oils being imported in 2014.

About $19 million was spent between January and June.

Zimbabwe has four oil producing firms — ETG Parrogate, Surface Investments, Olivine and United Refineries.