MEASURES being implemented by government to stimulate the manufacturing sector should be supported by industry for the growth of the economy. In his recent mid-term fiscal policy review, Finance and Economic Development Minister Patrick Chinamasa increased excise duty on vehicles, introduced a five percent excise duty on airtime for voice and data, hiked tax on fuel and import duty on selected products such as cooking oil and mealie-meal.
There were mixed reactions to these measures with some slating them citing their potential to raise prices of goods and inflation. But Minister Chinamasa’s interventions are proving to be a masterstroke with local companies enjoying a new lease of life after being given breathing space to penetrate the market. We refer here to an article in yesterday’s edition of Business Chronicle where it was reported that the recent tightening of import duty had started paying dividends resulting in an increase in the supply of local products on the market and a reduction of prices of certain basic commodities. Buy Zimbabwe Business Development Executive Alois Burutsa told journalists in Bulawayo that Minister Chinamasa had added impetus to the revival of industries in the country.
“As Buy Zimbabwe we’re pleased with the results of Chinamasa’s increased excise duty on vehicles, the five percent excise duty on airtime for voice and data, fuel tax hike and import duty on selected products such as cooking oil and mealie meal,” he said.
“Contrary to what people thought, prices haven’t increased. In fact, they’ve actually gone down.”
Burutsa said products such as Schweppes Mazoe have reduced prices from about $3,50 to $2,80 for two litres due to an increase in volumes and that Delta one litre drinks have gone down from $1,25 to $1. He said the re-opening of companies such as Archer Clothing in Bulawayo and United Refineries Limited alongside other big entities such as Zimplow and Datlabs would go a long way towards increasing employment levels in Bulawayo.
Burutsa said the latest figures from a Retailers and Suppliers Conference held two weeks ago showed a reduction in the country’s import bill after the government effected the new tax regulations.
“The ministry has helped the local market and latest figures show that there’s been a reduction in the country’s import bill. This means that there’s an additional $900 million circulating in the country,” he said.
Burutsa said the percentage of local products to imported goods has increased from 35 percent to 50 percent adding that Buy Zimbabwe would be making quarterly reviews, working with the Consumer Council of Zimbabwe (CZI) to measure and monitor the success of the Buy Zimbabwe initiative. This is certainly good news for the local manufacturing sector which should feel emboldened by the latest developments. We are aware of efforts underway between government and industry to spur growth and increase capacity utilisation levels and we see a ray of light shining from the recent government initiative. Zimbabwe needs a strong manufacturing sector to spur the growth of the economy and we are positive that this can be achieved through unity of purpose.
The country’s huge trade deficit, averaging $250 million per month, is creating a situation where money, which is supposed to circulate internally, thereby creating liquidity, is in fact being exported by financing imports. The gap continues to widen further because local industries are struggling to meet consumer demand. However, the huge trade deficit also indicates that there is a market readily available in Zimbabwe which local manufacturers can tap into.
According to a Confederation of Zimbabwe Industries (CZI) Manufacturing Sector Survey, local companies were not exporting because their products had become uncompetitive on the export markets.
The companies also said the shortage of working capital had forced them to focus on meeting local demand while the high cost of production had rendered their products too expensive. This is militating against the revival of the economy. The government should therefore focus on findings ways of capacitating industry, reducing imports and sprucing up its image to ensure that Zimbabwe becomes a favourable destination for Foreign Direct Investment.
The increase in the availability of local goods on the market indicates that it is possible to substitute imports with goods produced in Zimbabwe. This is a starting point. Let’s redouble our efforts to make the Buy Zimbabwe campaign a success.