THE analysis by the Maji-Marefu Institute of Economic Governance (boxed) raises important points regarding the recent challenges faced by retail shops in Zimbabwe, following the implementation of tax and anti-smuggling measures.
However, a deeper examination reveals systemic issues, particularly the government's failure to foster a fully operational industrial base, which has led to a heavy reliance on imports — even for basic commodities such as salt.
Clarity and structure
While the critique is structured logically, it can benefit from more explicit connections between the government's role and the broader economic challenges.
A clearer framework that outlines the relationship between government policies, industrial capacity, and the retail sector would enhance understanding.
Analysis of causes
The assertion that retail closures stem mainly from the crackdown on smuggling is compelling but overlooks a crucial factor: The government's failure to establish a robust industrial sector.
Zimbabwe's economy has become overly reliant on imports due to the lack of local manufacturing capabilities.
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This reliance is not only unsustainable but also exposes businesses to significant vulnerabilities, particularly as they struggle to source foreign currency for imports.
The challenge is exacerbated by the limited availability of the United States (US) dollar, which is essential for many businesses to secure goods from abroad.
Without access to foreign currency, companies face daunting obstacles in maintaining inventory and competitiveness, leading to increased operational difficulties.
The cost of doing business
The costs associated with doing business in Zimbabwe are compounded by the government’s inability to ensure full operational production across various industries.
This deficiency has forced businesses to import essential goods, driving up costs and creating an environment where smuggling appears as a more attractive option.
The very fact that Zimbabwe imports basic items like salt from South Africa underscores the fragility of the local economy and the failure to prioritise domestic production.
Moreover, the existence of tuck shops operating directly in front of larger supermarkets further illustrates the government's failure to create a level playing field. These informal retailers often evade taxes and regulations, undercutting larger businesses that contribute significantly to the economy through employment and tax revenue.
This lack of enforcement not only disadvantages formal retailers but also undermines the government's own tax base.
Responsibility and solutions
While the critique rightly suggests that retailers should shift towards local production, it must also emphasise the role of the government in creating an environment conducive to such a transition.
This includes implementing policies that support local industries such as tax incentives, access to financing, and infrastructure improvements.
The government must take proactive steps to eliminate the informal market's competitive edge, particularly by regulating tuck shops that operate in direct competition with formal retailers.
Conclusion
The conclusion emphasises the need for government intervention to create a conducive business environment but could benefit from a more detailed exploration of specific policies.Recommendations might include enhancing support for local production, improving foreign currency availability, and enforcing regulations on informal traders.
Final thoughts
In summary, while the critique highlights the impact of anti-smuggling measures on retail closures in Zimbabwe, it is crucial to address the broader systemic failures of the government. By failing to establish a self-sufficient industrial base, the government has created an environment where businesses are forced to rely on imports and informal trade.
A comprehensive strategy that focuses on building local production capacity, ensuring fair competition, and improving access to foreign currency is essential for stabilising and revitalising Zimbabwe’s economy.Only by addressing these root causes can the government hope to support its retail sector and foster a sustainable economic future.
- Mafa (formerly Mutowekuziva) is a registered legal practitioner. She has a keen interest in human rights, development and governance. These weekly New Horizon articles, published in the Zimbabwe Independent, are coordinated by Lovemore Kadenge, an independent consultant, managing consultant of Zawale Consultants (Pvt) Ltd, past president of the Zimbabwe Economics Society and past president of the Chartered Governance & Accountancy Institute in Zimbabwe. — [email protected].
