Category: zimbabwe

South Africa raised tariffs on poultry imports to help protect local producers who’ve sought measures to counter a flood of cheap shipments.

The announcement immediately drew criticism from the US government, which previously threatened to exclude South Africa from a preferential trade agreement after a disagreement over the levies in 2015. The US in January began reviewing the nation’s market access under the so-called Generalised System of Preferences — the loss of which could put as much as $2,4 billion of South African exports at risk.

Duties on frozen bone-in chicken pieces were raised to 62 percent from 37 percent for imports from all nations excluding the European Union and Southern African Development Community members, the National Treasury said in the Government Gazette on Friday. Levies for frozen boneless chicken cuts increased to 42 percent from 12 percent, it said.

South Africa imported 383 000 tonnes of chicken in 2018, excluding mechanically de-boned meat used to make processed food such as sausages, government data show. That’s about 19 percent of total supply.

The South African Poultry Association had applied for tariffs of 82 percent on poultry shipments from the US and Brazil that have contributed to annual losses of R6,5 billion ($393 million) for the local industry.

“We created grain farms in Brazil, America and Europe and we’ve created feed mills, chicken farms and slaughter houses there,” Izaak Breitenbach, a general manager of the South African Poultry Association said by phone.

“And what we’ve created is poverty in South Africa and slow economic growth in South Africa.”

The new measures don’t target a particular country and are intended to protect domestic farmers, said Sidwell Medupe, a spokesman for South Africa’s Department of Trade and Industry.

No import duties are levied on chicken pieces from the EU and SADC because of existing free-trade agreements.

It is unclear how the tariff increases will affect the ability of the US to export a maximum of 65 000 tonnes of frozen bone-in chicken portions for free.

That’s a legacy of a 2015 dispute over poultry that threatened to exile South Africa from the US market by excluding it from the African Growth and Opportunity Act, which provides 39 sub-Saharan African countries with
duty-free access to the US for about 6 500 products ranging from textiles to manufactured items.

“The US government is deeply disappointed with South Africa’s decision to raise the already high tariff rates on imported poultry to a substantially higher level,” Robert Mearkle, a spokesman for the US Embassy in Pretoria, said in an emailed response to questions.

Ensuring that US poultry exports “continue to have fair access to the South African market is critical,” he said.

South Africa’s government and industry representatives signed off on a “master plan” for the industry in November, in which companies committed to invest R1,5 billion in production facilities by the end of 2020 that could create almost 4 000 jobs.

The poultry industry is the second-largest component of South Africa’s agriculture industry and employs about 110 000 people, according to the industry body.  — Bloomberg.

Tawanda Musarurwa Senior Business Reporter

Zimbabwe’s insurance companies and pension funds were largely able to skate around the effects of currency adjustments last year to meet contractual obligations of at least $1,26 billion.

Official figures from the sector regulator — the Insurance and Pensions Commission (IPEC) — show that insurance firms paid out claims to the tune of $850 million, while pension benefits amounted to $416 million in 2019.

Total membership to pension schemes closed 2019 at 800 000.

Players in the local insurance industry (short-term direct insurers, funeral assurers, life direct assurers and micro-insurers) totalled 30 over the same period.

Significant fiscal and currency shifts from 2016 through 2019 ushered in conversion challenges, that were particularly felt by the insurance and pensions industry.

But unlike the hyper-inflationary period circa 2008 when the regulator failed to provide guidance, this time around IPEC issued several guidance papers to the insurance and pensions industry on how to deal with some of the conversion challenges.

One of the major criticisms of the Justice Smith Commission of Inquiry Report, was that the regulator failed to intervene in order to correct market failures and guide the industry and thus resulted in failure by the industry to institute financially sound systems and procedures.

But last year, IPEC issued 10 regulatory circulars to guide the industry on supervisory expectations; and developed supervisory frameworks including: The Troubled Institutions Resolution Framework; the Disclosure Guidelines for both Insurance and Pensions; and the Guideline on Adjusting Insurance and Pension Assets and Liabilities in line with Currency Reforms.

These perhaps contributed in protecting — to some extent — the insured and pensioners’ hard-earned savings. IPEC Commissioner Dr Grace Muradzikwa, said the level at which insurers and pension funds met their contractual obligations in 2019 point to a functional sector.

“For insurance claims, the industry paid close to a billion, $850 million to be precise, and in addition, pension pay-outs amounted to $416 million,” she said.

All things being equal, an insurer or pension fund should ensure that monies that are put in at the accumulation phase correspond or are better off at the de-accumulation stage.

However, in so far as these entities operate within the prevailing economic environment, outputs have not been up to par. In respect of the local pensions sector, for instance, the depreciation of the Zimbabwe dollar against the United States dollar has affected the imputation of assets held through defined benefit retirement plans.

A defined benefit pension plan is a type of pension plan in which an employer promises a specified pension payment, lump-sum or combination thereof on retirement that is predetermined by a formula based on the employee’s earnings history, tenure of service and age.

To this extent, an inflationary environment such as the one Zimbabwe is presently undergoing affects the purchasing power of the pension.

On the other hand, defined contribution (DC) plans — which are a type of retirement plan in which the employer, employee or both make contributions on a regular basis, and future benefits fluctuate on the basis of investment earnings – have also not been spared by the weakening currency because a significant number of pension funds are heavily invested on the capital markets, which have been under-performing in line with the depressed economic performance.