What can a little-known toothpaste brand tell us about the impact of Zimbabwe’s trade and currency challenges? Quite a bit, it turns out.
The Competition and Tariff Commission (CTC) wants the government to slap a 40% “safeguard” duty on imported toothpaste, saying the flood of cheaper imports is crushing the country’s only local producer, Merken.
CTC’s investigation, whose results are published in the latest government gazette, found that toothpaste imports more than doubled, up 124%, between 2021 and 2023. That spike came after government lifted duty on imports. Shipments jumped from 1.2 tonnes in 2021 to 2.7 tonnes last year. The result? Merken’s market share was squeezed from 2.04% in 2020 to below 1% in 2023, while its capacity utilisation dropped to just 3.39%. The imported products, mostly from South Africa, were up to 40% cheaper than Merken’s, above being far more recognised brands than Merken.
CTC says this damaged Merken: “Other potential factors, including currency volatility and electricity supply challenges, were examined and found not to have materially contributed to the injury.”
So what did? The Commission points to two main factors, the lifting of import restrictions, and a weak South African rand, which made South African toothpaste even cheaper on Zimbabwean shelves. It’s a story that many manufacturers in Zimbabwe will be familiar with; local producers face high costs, and must compete with South African producers, with larger capacities and benefitting from the rand. In a market where consumers are already squeezed, price tends to win.
