Manufacturing sector calls for trade protectionism
LIVINGSTONE MARUFU
Zimbabwe’s manufacturing industry has called on the government to come up with more strategic trade protectionism amid revelations the sector is battling serious viability challenges.
The Confederation of Zimbabwe Industries (CZI) CEO, Sekai Kuvarika told Business Times the influx of cheap imported products was adversely impacting local manufacturing companies.
“CZI is concerned that several players who have invested heavily into manufacturing continue to face viability challenges in the face of fierce competition from imports.
“Let’s take CAFCA as an example, it is the only firm in the business of manufacturing electrical cables and conductors in Zimbabwe but is facing viability challenges due to the coming in of imported products, including those that do not meet the safety standards,” Kuvarika said.
She added: “Also, Trade Kings invested in the manufacturing of washing powder in the country at a time when its competitors had closed their plants in Zimbabwe to supply from countries outside. However, the firm is also facing viability challenges due to import and smuggled products competition.”
Kuvarika said bottle recycling companies were also not getting enough protection resulting in the dumping of bottle drinks from South Africa.
“There are two companies that produce PET plastic strapping in Zimbabwe, one is at 60% capacity and the other at 10% capacity. However, there is competition from imports for a product that is produced from recycled Chibuku and water bottles locally hence the capacity to produce locally is not fully utilised.”
Kuvarika said there was a need to incentivise the few companies that are producing so that they can withstand strong competition from cheap imports.
“Rewarding firms that take a broad step to invest in strategic industries with some temporary protection through high tariffs for five years. Duty should be removed on items that are used in the manufacturing of the final product, for example, LED light bulb components have duties of 5 – 40% on different items, yet the finished LED bulb has zero duty,” she said.
Kuvarika said VAT on imports should not be increased on raw materials, especially where no local capacity exists to produce them and there should be no introduction of new taxes for formal businesses as a way of increasing tax revenues.
Instead, the focus should be on how to formalise the informal sector to widen revenue collection, according to the manufacturing sector.
The rebate on duty for Special Economic Zones operators should be extended to capital goods, construction materials.
Kuvarika said the government should put tight controls at ports of entry to curb the smuggling of finished goods and there was a need to lessen the tax burden by avoiding the multiplication of permits and licences.
