Harare, the capital of Zimbabwe.

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  • As of Tuesday, Zimbabwean importers will not pay duties on a number of imported staple goods – including rice, oil, sugar, corn flour, milk powder and soap – for the next six months.
  • The move is aimed at curbing the rapid rise in local inflation.
  • SA exporters seem to benefit, while the move could hurt local producers.

On Tuesday, Zimbabwe abolished import duties on a number of key commodities – including rice, butter, sugar, cornmeal, 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 fall sharply against major currencies.

Officially, the Zimbabwean dollar started trading at Z $ 108 per US dollar, but is now trading at Z $ 277 per $ 1 in the newly introduced interbank market. In the parallel market, the fall of the Zimbabwean dollar is more pronounced – it fell from 210 Z $ to the US dollar at the beginning of the year, but now trades from 420 to 500 Z $.

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The suspension of duties will be valid for six months, starting on May 17.

South Africa, Zimbabwe’s largest trading partner, will benefit from the new measures, while the move could put more pressure on Zimbabwe’s industry.

Although Zimbabwe’s production operates under a multi-currency system, it is indexed to the U.S. dollar, and with the strengthening dollar, consumers are more likely to choose imported products rather than domestic ones.

Recently, Zimbabwean authorities said that the main goods of local production now occupy 70% of the shelves.

Over the weekend, Finance Minister Mtuli Nkube said the new measures were aimed at improving access to available basic goods.

He stressed the impact of the war in Ukraine and said the government aims to stabilize the economy, curb inflationary pressures and restore the purchasing power of the local currency.

“Those who have free funds are immediately allowed to use these funds and other resources to import basic goods,” Ncube wrote in a statement issued Saturday night.

Earlier this month, Zimbabwe suspended bank lending to most industries to stop the fall of its local currency. It was alleged that some parties borrowed money to speculate and undermine the local currency.

However, the Zimbabwean government quickly abandoned regulation after local companies failed to borrow what they needed to buy raw materials and machinery.

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