‘Manufacturing growth to remain positive in 2022’

26 Nov, 2021 - 00:11 0 Views
‘Manufacturing growth to remain positive in 2022’

The Herald

Nelson Gahadza-Senior Business Reporter

FINANCE and Economic Development Minister Mthuli Ncube says the manufacturing sector growth is expected to remain positive at 5,5 percent in 2022 underpinned by various tax incentives aimed at stimulating industrial expansion.

Presenting the 2022 national budget in Parliament yesterday, Minister Mthuli said the government will facilitate a shift towards production of high value manufactured products which contribute more to output, export earnings and create decent jobs.

“The growth is being sustained by relatively high consumer demand mainly from increased incomes from agricultural activities, infrastructure spending, increased mining activity and general reopening of the economy,” he said.

In order to sustain the growth momentum, the Ministry of Industry and Commerce was allocated a budget of $3,9 billion which will be channelled mainly towards different industry capacitation programs.

Minister Mthuli noted that for the year 2021, manufacturing sector growth has been slightly reviewed downwards to 6,2 percent from the initial projection of 7 percent  largely on account of Covid-19 national lockdown measures and delays in accessing foreign currency and intermittent supply of electricity.

The minister availed various revenue measures that sought to maintain fiscal stability through stimulating growth of productive sectors, enhancing revenue collection, providing relief and simplifying tax administration in order to improve the business environment.

He noted that the government has over the period 2009 to date availed tax rebates and Value Added Tax (VAT) deferment to manufacturing, mining, tourism, agriculture, transport, energy and health sectors targeted at lowering production costs.

In order to assist the retooling of companies, the Government, in 2016, introduced a rebate of duty on capital equipment imported for use in specified industries.

Cognisant of the wide usage of such capital equipment by productive sectors, and the need to ease the cost of doing business, I propose to provide duty free importation of the capital equipment through the tariff regime,” he said, adding that the measure takes effect from 1 July 2022.

Minister Mthuli said in the interim, the Government will move to strengthen the provisions governing the facility, in order to minimise loopholes in administration.

He said the Government support to the dairy sector over the years had triggered a positive response towards development of the dairy industry and since the beginning of the year, investment across the value chain amounted to US$20 million.

Minister Mthuli, in order to augment the supply of raw milk, mindful of the need to revitalise the dairy industry, extended duty suspension on minimum quantities of milk powder for the year 2022.

The minister said in line with interventions proposed in the National Development Strategy 1 (NDS1) to improve performance in the dairy value chain, the budget introduced a levy of five percent on the value of imported dairy products.

“The funds will be ring-fenced for re-capitalising the Dairy Revitalisation Fund, targeted at growth and development of the dairy sector by increasing the national dairy herd, enhancing competitiveness of the dairy sector, supporting modernisation and standardisation of local milk production.”

Minister Mthuli said the Government will capacitate  the Industrial Development Corporation of Zimbabwe (IDCZ) to the tune of $2,3 billion for the corporation to provide medium and long-term finance to enable companies across the agricultural, mining and service sectors implement value addition activities, following the addressing of outstanding governance issues.

“Subsidiaries of the IDC which span across the sectors of mining, car assembly, real estate, fertiliser manufacturing, cement production and food processing presents an opportunity for the Government to directly drive the value addition agenda by growing locally manufactured products,” he said.

According to the 2022 National Budget statement, for the period to September 2021, an amount of $525,7 million has been released towards capacitation of some of the companies.

Minister Mthuli said that the ever-changing global technology landscape is imperative that industry adopts the Fourth Industrial Revolution which encompasses the two vital elements of upgrading and modernisation.

He therefore said the Government supported the collaboration between the institutions of higher learning, industry and research bodies to ensure that institutions produce high end scientific, technological, research and engineering skills that enable local industries to compete globally.

The Finance Minister highlighted that the revival of Ziscosteel is key to the economy given its potential benefits in jobs creation and value chain impact in companies such as National Railways of Zimbabwe and Hwange colliery, as well as foreign currency savings from import of steel products in excess of US$1 billion.

As a result, Government will continue work with potential investors for the resuscitation of Ziscosteel and in the meantime, a short-term roadmap targets recapitalisation and resuscitation of the firm’s subsidiaries in the steel industry, particularly Lancashire Steel is in place.

Minister Mthuli noted that in support of the retooling and capitalisation of the local industry, a revolving facility administered through commercial banks will be established using Special Drawing Rights (SDRs) from the International Monetary Fund.

He said modalities for accessing the funds are still being worked out in consultation with relevant stakeholders.

“This will be complimented by support from the African Development Bank (AfDB) to the tune of US$0,9 million to Small and Medium Enterprises on gemstone value addition and beneficiation. “The project is expected to benefit approximately 100 000 people across the value chain, including youth and women,” he said.

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