Source: Minister seeks Treasury, RBZ industry incentives | The Herald November 26, 2019
Golden Sibanda Senior Business Reporter
New Industry and Commerce Minister Dr Sekai Nzenza, says she intends to engage her finance counterpart, Professor Mthuli Ncube and Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya, to discuss possibility of further fiscal and monetary incentives to boost industrial productivity.
Minister Nzenza said, in an interview with The Herald Finance and Business, that she will meet Minister Ncube and Dr Mangudya to explore further fiscal and monetary incentives that can drive the subdued industrial productivity and growth.
Minister Ncube availed a number of incentives through the 2020 National Budget earlier this month to enhance productivity, but projected a measly 1 percent growth for industry, signifying the heavy burden of factors that continue to weigh down its growth.
Zimbabwe’s industry is currently struggling to increase productivity due to a number of constraints that include crippling power cuts, high utility costs, shortage of foreign currency, limited access to affordable long-term funding and antiquated equipment.
The Confederation of Zimbabwe Industries (CZI) says average industrial production has fallen to around 40 percent while Minister Ncube has projected a marginal 1 percent growth this year.
This situation has forced Zimbabwe to rely on imported products at a time the country is also facing an acute shortage of foreign currency to import essentials such as power, raw materials and critical medicines.
Manufacturing is of strategic importance to Zimbabwe’s economy as it supplies 50 percent of agricultural inputs while consuming nearly 60 percent of the agricultural produce.
Apart from contributing roughly 12 percent of gross domestic product, the sector also employed hundreds of thousands of workers both directly as well as indirectly.
Minister Nzenza said where Zimbabwe’s industry is at the moment requires partnerships to drive production and job creation after years of low productivity and decline.
She said the meetings with the fiscal and monetary authorities was meant to explore how the parties can work together and review current processes to promote production and growth of industry.
“To awaken the industry, we need to work with the Ministry of Finance to identify if there are any bottlenecks. I have already met the RBZ governor and we discussed export incentives for producers. When I met Minister Ncube we deliberated on the need for (more) tax rebates — we have to increase production. We also need to enhance local content,” the Minister said.
Minister Ncube has either maintained tax rebates or extended their tenures as he targets growth in the sector. However, the rebates are for a limited section of industry that includes leather and hides, dairy products, clothing and textiles, pharmaceuticals and imports of semi-knocked down kits for vehicles and furniture makers.
Protective clothing manufacturer, James North managing director, Sifelani Jabangwe, who is CZI immediate past president, said industry needed additional stimulus.
“I think (what is needed is) probably additional stimulus for industry; access to foreign currency and improvement on ease of doing business, particularly taxation and border procedures for both imports and exports and perhaps export oriented incentives,” he said.
Zimbabwe’s industry is expected to post some modest recovery and increase production on the back of anticipated improvement in aggregate demand after Minister Ncube said austerity measures will be significantly curtailed in the hunt for growth, productivity and jobs.