Surge in illicit imports and counterfeit goods threatens Zimbabwe’s local industries and value chains

DESPITE existing legislation, legal enforcement, and various efforts to combat informal imports, the market continues to witness a surge in illicit and smuggled counterfeit goods. This increase imposes unfair competition on local industries, exacerbating their challenges.

The situation has deteriorated with the proliferation of shops selling counterfeit products on nearly every corner of Bulawayo streets. These shops sell goods at lower prices than locally made products, thereby disrupting local value chains.

The Government’s initiative to elevate the economy through value chains is being undermined, affecting the 10 priority value chains and leading to a decline in capacity utilisation.

The National Development Strategy (NDS1) prioritises value chain development, identifying 10 priority value chains for industrial growth and structural transformation. These include cotton to clothing, leather, iron and steel, pharmaceuticals, fertiliser, dairy, soya, and sugar value chains.

Responding to questions from the Business Chronicle National Blanket business development manager Mr Shepherd Nyambirai highlighted the unfair competition posed by the increase of shops selling counterfeit products. He noted that these shops have expanded the distribution network for cheap imports, further challenging local industries.

“Unfair competition from cheap imports has significantly affected the cotton to clothing value chain. As a result, the Cotton Company of Zimbabwe (Cottco) is exporting over 90 percent of locally grown cotton, with less than 10 percent being value-added,” said Mr Nyambirai.

“Local textile and clothing manufacturers cannot compete with the cheap imports and have either downsised or closed shops. Over 50 000 jobs have been lost in this value chain in the past 10 years.”
Mr Nyambirai stressed the need for Government protection for the local textile and clothing industry.

“As local industries, we are not avoiding competition, but it must be fair, and the playing field must be level,” he said.

“Most of these imports are not paying duty due to under-invoicing in quantities and value, and abuse of trade agreements, among other reasons. For instance, the Government banned the importation of blankets some years back to protect the local industry, but many of these Chinese shops still sell imported blankets with ‘Made in Zimbabwe’ tags.”

Industry players have called for more stringent protective measures from the Government to ensure the survival of local industries. Beyond protection, Mr Nyambirai suggested that the Government should consider providing a funding facility for distressed companies to source capital equipment and raw materials.

“We had high hopes for the Special Drawing Rights Fund (SDRs), but it’s taking a long time to materialise,” he said. The textile industry was supposed to access the SDRs for retooling.

The sector has also been advocating for the regulation of second-hand clothes imports, which have adversely affected various industries. – -chroncile