Com­pa­nies seek more ex­port in­cen­tives

Chronicle (Zimbabwe) - - Business Chronicle - Oliver Kazunga

IN­DUS­TRIES in Zim­babwe say the Govern­ment needs to of­fer more ex­port in­cen­tives for the man­u­fac­tur­ing sec­tor so as to pro­mote eco­nomic growth.

Zim­babwe has suf­fered sub­dued eco­nomic growth since the turn of the mil­len­nium with a no­tice­able drop in do­mes­tic out­put and ex­port earnings.

Ac­cord­ing to the 2016 Con­fed­er­a­tion of Zim­babwe In­dus­tries (CZI) man­u­fac­tur­ing sec­tor sur­vey re­port re­leased last week, com­pa­nies high­lighted that the Govern­ment should con­tinue of­fer­ing in­cen­tives such as sub­si­dies, raw ma­te­rial im­port re­stric­tion or re­duc­tion, tax re­duc­tion and re­bates.

In­dus­try also pointed out that the Govern­ment should con­tinue ad­dress­ing the ease of do­ing busi­ness, im­prove on pol­icy con­sis­tency, mar­ket re­search, ex­hi­bi­tions and in­ter­na­tional awards.

“The rea­sons for not ex­port­ing are high cost of ex­port­ing, low ca­pac­ity for ex­port­ing, cum­ber­some ex­port pro­ce­dures, and cap­i­tal con­straints, among oth­ers,” CZI said in the re­port.

As part of in­cen­tivis­ing the lo­cal ex­port sec­tor, the Re­serve Bank of Zim­babwe (RBZ) has an­nounced the in­tro­duc­tion of bond notes which are ex­pected to start cir­cu­lat­ing to­day. The print­ing and is­suance of bond notes to the mar­ket is rel­a­tive to the amount of ex­ports.

RBZ Gov­er­nor Dr John Man­gudya has said the in­tro­duc­tion of an ex­port in­cen­tive scheme of up to five per­cent was meant to pro­mote the ex­port of goods and ser­vices to help sus­tain the econ­omy’s ca­pac­ity and abil­ity to gen­er­ate for­eign ex­change to meet its do­mes­tic and for­eign re­quire­ments.

Of late, con­cerns have been raised over Zim­babwe’s neg­a­tive trade deficit. For the eight months pe­riod to Au­gust this year, the coun­try’s trade deficit stood at $1,8 bil­lion. Ac­cord­ing to the Zim­babwe Na­tional Statis­tics Agency, im­ports were made up of con­sump­tive goods which con­tin­ued to out­strip ex­ports.

The Govern­ment in June pro­mul­gated Statu­tory In­stru­ment 64/2016, which re­moves sev­eral goods from the Open Gen­eral Im­port Li­cence as part of mea­sures to pro­tect the lo­cal man­u­fac­tur­ing sec­tor from un­war­ranted com­pe­ti­tion.

“The top prob­lem­atic fac­tors for ex­porters are: ac­cess to trade fi­nance, ac­cess to im­ported in­puts, at com­pet­i­tive prices, bur­den­some pro­ce­dures at for­eign borders, dif­fi­cul­ties in meet­ing cus­tomer re­quire­ments as well as high cost of de­lays caused by do­mes­tic trans­porta­tion,” said the CZI re­port.

Mean­while, the sur­vey has shown that syn­er­gies with small to medium en­ter­prises (SMEs) have sig­nif­i­cantly boosted ca­pac­ity util­i­sa­tion re­sult­ing in a 13 per­cent in­crease in ca­pac­ity util­i­sa­tion this year.

Ca­pac­ity util­i­sa­tion for SMEs stood at 48 per­cent, while for big­ger play­ers it was at 46 per­cent.

About 53 per­cent of the re­spon­dents who par­tic­i­pated in the sur­vey in­di­cated that they al­ready have small to medium en­ter­prises in their sup­ply chain.

“This shows that in as much as link­ages with SMEs has not been co­or­di­nated, a num­ber of com­pa­nies have al­ready been work­ing di­rectly with SMEs,” said CZI.

“Of the 53 per­cent, 41 per­cent in­di­cated that SMEs sup­ply raw ma­te­ri­als, 10 per­cent in­di­cated dis­tri­bu­tion ser­vices, and two per­cent in­di­cated af­ter sales sup­port. SMEs recorded an av­er­age ca­pac­ity util­i­sa­tion of 48 per­cent while large cor­po­rates recorded 46 per­cent.”

CZI said the weighted ca­pac­ity util­i­sa­tion of 47,4 per­cent would im­ply an in­crease of 13,1 per­cent from last year’s weighted of 34,3 per­cent. One of the rea­sons why ca­pac­ity in­creased, ac­cord­ing to the apex body, is the “boosted re­sponse rate within the small to medium sized en­ter­prises.”

CZI sug­gested that as a way of strength­en­ing busi­ness link­ages, SMEs should at­tain a sem­blance of pro­fes­sion­al­ism and to en­gage in train­ing and de­vel­op­ment ac­tiv­i­ties.

They would stand greater chances of be­ing picked for syn­er­gies with big­ger cor­po­rates, and if they outdo them­selves, it would be the open­ing to greater op­por­tu­ni­ties.

The apex body also sug­gested Govern­ment in­ter­ven­tion as a way of cre­at­ing busi­ness link­ages. One of Govern­ment’s poli­cies, which sup­port SMEs states that Govern­ment should award 25 per­cent of its ten­ders to SMES.

CZI also pointed out cap­i­tal­i­sa­tion of SMEs as im­per­a­tive to the cre­ation of last­ing busi­ness syn­er­gies. The un­avail­abil­ity of af­ford­able fi­nanc­ing is also a ma­jor bar­rier for growth of the sec­tor.

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