Government punishes Schweppes by revoking its import duty exemption

These past days Schweppes Zimbabwe has been going viral on social media for the wrong reasons. It appears that a number of their products are now being exclusively sold in foreign currency. As we note in our earlier piece on the issue, they are not the only ones to be doing this, a growing list of products in Zimbabwe are now being sold exclusively in foreign currency. The move by Schweppes did not go down well with the Zimbabwean government who decided to retaliate by revoking the import duty exemption they had given to Schweppes.

Below is the text letter from the Zimbabwean treasury to Schweppes:

Mr. C. Msipa

Managing Director

Beitbridge Juicing (Pvt) Limited

RE: SUSPENSION OF DUTY ON IMPORTED ORANGE AND GRAPEFRUITS
Reference is made to the above-mentioned subject.

As you would be aware, Treasury, on 1 July 2022, provided a once-off suspension of duty facility for your company to import 10 000 MT of oranges and 5 000 MT of grapefruits. This measure was expected to augment local supplies, thereby minimising supply disruptions, as well as guaranteeing affordable prices to the general public.

Treasury, however, notes that the pricing of your products is now exclusively in foreign currency, notwithstanding Government’s initiatives to promote the use of local currency. You will be aware that beneficiaries of tax incentives are expected to complement Government’s interventions with responsible pricing models with a view to ensuring affordability of goods, which is key to achieving the Government’s developmental objectives.

In view of the above, I wish to advise that, pending the conclusion of investigations on your pricing model, the Suspension of Duty Facility has been revoked.

In this regard, all new imported consignments will, with immediate effect, be liable to duty at prescribed rates.

G.T Guvamatanga

SECRETARY FOR FINANCE AND ECONOMIC DEVELOPMENT

The text of the letter

Singling out Schweppes

There are two things to note here. First Schweppes, as we have already said, are not the only ones selling exclusively in foreign currency. We have Steri Milk, Pharmacies, Zuva LP Gas and a host of other products being sold and selling in USD only. Even at some point bakeries demanded foreign currency only as a way to gain the government’s attention. The second thing to note is the singling out of Schweppes for punishment. The aforementioned have either been tacitly allowed to continue charging in foreign currency or received some sort of concession from the government that makes it viable for them to charge ZWL prices.

It’s not clear why Schweppes’ gamble did not pay off in that regard. It could be that their product is just deemed to be not that essential. People can afford to not drink Mazoe but cannot do without bread and fuel which are more in demand and essential. This means that the government can whip Schweppes without fear of annoying the general public. It also explains why Dairibord seems to have escaped punishment even though Steri is selling in USD only in a lot of establishments. You don’t want to be accessed of taking away the people’s milk but no one cares about Mazoe seems to be the thinking.