The shortage of foreign currency has limited local manufacturers from benefiting from import restrictions placed on some products, a tyre manufacturer has said, warning of shortages.
BY BUSINESS REPORTER
In July, the government promulgated Statutory Instrument (SI) 64, restricting the importation of 43 products in a bid to grow local industries.
In a statement accompanying National Tyres Services Limited (NTS) results for the half year ended September 30, 2016, the company warned that local firms would not enjoy the impact of SI 64.
“Although SI 64 attempted to curb unregulated imports of finished goods, the serious shortage of foreign currency is limiting the intended benefits of this policy initiative for local manufacturers,” it said.
The government introduced the restrictions to boost local production and produce more for the export market to generate foreign currency for the economy. Exports contribute over half of the economy’s liquidity.
NTS said the delays in foreign payments remained a significant threat to business viability, as stocking levels diminish and foreign suppliers tighten trading terms, warning that shortages on some product lines were beginning to emerge.
“The lack of foreign currency, if not properly managed, will lead to shortages, which will result in inflation creeping in, with the resultant effect of reducing living standards and thus further lowering demand,” it said.
In November, cooking oil shortages were experienced after manufacturers faced delays in paying for raw materials.
The Chamber of Mines has also warned of a drop in output, saying the sector was facing delays in foreign payments for raw materials, mainly for explosives, which are essential in gold production.