Government urged to enact policies that promote capital equipment acquisition
The Zimbabwe government has been urged to advance policies that make the importation of capital equipment easy, industrial experts say this would go a long way in enhancing capacity utilisation in the manufacturing sector, which is currently low.
Most players in the manufacturing sector are being downplayed by antiquated industrial machinery, which are prone to constant breakdowns and require regular repairing, at times consuming production time, as work would stop throughout the period of the repairs. This has also dented the country’s ability to attract foreign currency, as most goods are exported without beneficiation.
Industrialists have therefore called for the policies that make the bringing in of capital equipment affordable through the relaxing of duty. National Spring Steel and General Engineering managing director George Mandizvidza says the revision of tariff registration is vital for the growth of the manufacturing sector. “The removal of duty on equipment that is essential for the expansion of the manufacturing sector is critical in turning around the division’s fortunes and enhancement of economic growth,” he says.
Recent manufacturing research and surveys have indicated that outdated machinery is a major contributing factor affecting the sector’s capacity utilisation. In most cases it has been rated below 50 percent, which is the desirable levels, a clear sign of deindustrialisation.
According to the Confederation of Zimbabwe Industries’ 2015 Manufacturing Sector Survey, the use of obsolete machinery was identified as one of the chief culprit dogging the value addition sector.
Deven managing director Patrick Munyaradzi agrees that the value addition section of the Zimbabwean economy can be boosted if the acquisition of capital equipment is liberalised in such a way that duty is drastically reduced, or eliminated. He also called on for the allocation of tenders to local bidders, as this can create employment, and help keep the foreign currency within the country’s borders.
“We call for the allocation of work within our competency with deposit of about 60 percent, this would mitigate for working capital challenges,” he says.
Munyaradzi adds that the 60 percent deposit would go a long way towards fulfilling orders, with the other 40 percent paid during or after the completion of the task. He adds that data from industrial research has also shown that as one of the other challenges on capacity utilisation is working capital deficits.
CAFCA sector manager- mines, Forbes Nzuwa the manufacturing sector in Zimbabwe have the capacity to contribute immensely the national Gross Domestic Product is challenges to do with working and capital equipment is addressed.
In the effort to promote the local manufacturing industries, the government through the Ministry of Industry and Commerce, introduced Statutory Instrument 64, which restricted the importation of certain products that were identified as being adequately produced locally.
The move was met with mixed feelings across the economy, with some critics blaming the government of trying to protect the industry they say was literally non-existent. It in fact triggered nationwide protests early this year that saw property worth thousands of dollars being destroyed through arson and sabotage.
Having had noticed some of the shortcomings of the SI 64, the ministry then engaged the business community and captains of industries to a round table meant to review the instrument, clear any grey areas, and for possible adjustments.