THE price of rice could be hiked up to US$3 from US$2 if Finance Minister Mthuli Ncube does not reverse a 15% Value Added tax (VAT) introduced earlier this month, grain millers have warned. Ncube announced Statutory Instrument 15 of 2024 on February 9.

In a statement, Grain Millers Association of Zimbabwe (GMAZ) President Tafadzwa Musarara also warned that the tax could backfire on government efforts to collect revenue as cheaper, un-taxed rice from South Africa might soon flood Zimbabwe’s market.

“An imposition of VAT will increase the costs of 2kg rice from US$2.00 to US$2.30 or US$2.40,” said Musarara.

“Due to change complications, some retailers may end up pricing the same at US$3.00. This will weigh down heavily on consumer spending.

“Rice in South Africa is VAT free and will land in Zimbabwe cheaper than locally-processed rice. The local market will soon be dominated by prepacked rice imports putting in danger 2,800 local workers in the rice sector and also the massive infrastructure will be made redundant.

“Consequently, government will not earn the intended revenue. We anticipate that VAT collection to be low, and the fiscus will lose employment related tax revenues due to the job losses.”

Rice is the second most preferred food in Zimbabwe according to GMAZ with a monthly consumption of 15,000 metric tonnes.

The consumption is expected to rise to 22,500 by 2028.

Added Musarara: “Rice has favourable nutritional content than maize-meal as it is low in fat, cholesterol free and high in fibre. It has a lower glycaemic index compared to maize-meal, thus keeping blood sugar more stable compared to maize- meal.

“This attribute is critical in the country’s fight against non-communicable diseases such as sugar diabetes. Rice is gluten-free and ideal for persons with gastrointestinal health challenges.”