Parly committee proposes tax exemptions to boost fertiliser production

Source: Parly committee proposes tax exemptions to boost fertiliser production – herald

Nelson Gahadza

Senior Business Reporter

ZIMBABWE should incentivise local fertiliser production by removing taxes on critical raw material imports to strengthen supply security and industrial capacity, Parliamentary Portfolio Committee on Industry and Commerce chairman Cde Clemence Chiduwa has said.

Speaking after an engagement with management of Omnia Fertiliser Zimbabwe in Harare yesterday, Cde Chiduwa said the committee will recommend tax exemptions on key inputs used in fertiliser manufacturing as part of broader efforts to revive the sector.

“We are going to recommend that raw materials used in the fertiliser-making process should not be taxed. There are certain inputs, such as boron, zinc and sulphate, which are currently being taxed.

“Removing these taxes is one of the incentives that will support production,” he said.

The call comes amid concern over Zimbabwe’s heavy reliance on imported fertiliser inputs and vulnerability to global supply disruptions.

Cde Chiduwa said the Committee’s visit to Omnia aimed to assess its value chain, capacity utilisation and constraints, with findings pointing to structural weaknesses in local production.

The company is presently operating at about 33 percent of its installed capacity, which can reach up to 90 000 tonnes per year.

“The major issue we have noted is that most of the raw materials are imported: nitrogen, phosphate, potassium, zinc, sulphate and boron.

“Our focus as a committee is to ensure localisation of the value chain, where these raw materials are sourced locally,” he said.

Cde Chiduwa noted that while Omnia has significant blending capacity, the absence of granulation capability limits value addition and employment creation.

Granulation is a more advanced stage of fertiliser production and is undertaken by other local players such as Chemplex Corporation, ZFC Limited and Windmill Private Limited, with raw material inputs expected from Sable Chemicals.

However, subdued production at some upstream firms is weakening the entire fertiliser value chain. “There is not much production happening at Chemplex and Sable Chemicals at the moment, and that is affecting the entire ecosystem,” Cde Chiduwa said.

He warned that global geopolitical tensions, particularly in the Middle East, are heightening risks to fertiliser supply chains, especially for ammonia and phosphorus, key inputs largely sourced from international markets.

“If we do not plan well in time, we are going to face serious shortages of fertilisers, particularly ammonia which passes through the Strait of Hormuz, as well as phosphorus from affected regions,” he said.

To mitigate these risks, Cde Chiduwa stressed the need for a stable and predictable macroeconomic environment, alongside deliberate industrial policy measures that prioritise companies with higher value add processes.

“When allocating fertiliser production for Government programmes, we must focus on companies with granulation capacity because they create more employment compared to blending operations,” he said.

He added that strengthening local production would not only enhance supply security but also stimulate job creation through increased demand for engineers, technicians and other skilled personnel.

Omnia Zimbabwe, a subsidiary of South Africa’s Omnia Holdings Limited Group, said it supports the Government’s localisation drive and is keen to scale up production if key bottlenecks are addressed. Omnia Zimbabwe country manager Mr Munyaradzi Maisva said ongoing engagements with policymakers are critical in aligning industry and Government priorities.

“The key drive for localisation — we are fully behind it. We support it because it makes us more competitive in the region,” he said.

Mr Maisva noted that Zimbabwe continues to import significant volumes of ammonium nitrate (AN) and mono ammonium phosphate (MAP), which are essential for agriculture.

He said reviving local producers such as Sable Chemicals and Zimphos would significantly reduce import costs and improve efficiencies.

“If we are able to produce these locally, we cut transport costs and other charges associated with imports.

“It benefits both fertiliser companies and the economy at large,” he said.

Omnia Zimbabwe operates a blending plant with an annual capacity of 80 000 to 90 000 tonnes, but present capacity utilisation remains between 30 and 40 percent due to supply constraints and market challenges.

Despite these hurdles, the company indicated it has secured some stocks for the upcoming winter cropping season, although global uncertainties remain a concern.

“We are somewhat prepared for winter, but the Middle East tensions are not in our favour. We are doing our best to secure products for farmers,” Mr Maisva said.

Mr Chiduwa said the Parliamentary Committee will consolidate its findings into policy recommendations aimed at strengthening the fertiliser value chain and reducing the country’s dependence on imports.