basic commodities 2.jpgThe local manufacturing industry has been lobbying government to review downwards duty on raw materials, citing viability concerns due to unfair competition with imported finished products.

The local manufacturing  industry is not happy with the current mismatch between imports and exports which has resulted in the country’s trade deficit widening to US$2 billion.

The charging of duty on imported raw materials has meant that locally produced commodities are more expensive than those imported.

 

Even companies which manufacture medicines have felt the pinch resulting in Zimbabwe importing drugs which can still be manufactured locally.

 

The result has been loss of employment to many people as companies downsize their operations as they cannot effectively compete.

 

This also has a ripple effect as government will collect lesser revenue thus affecting other sectors.

While Government is expected to announce the future of the duty free regime for basic commodities which is expiring next week, industrialists are proposing a zero rating duty policy on raw materials for basic and strategic commodities arguing that the move will lower costs and increase output.

A manager for a local manufacturing firm, Ms Grace Magama says industry is failing to sustain local demand due to high production costs mainly from imported raw materials in a move that has resulted in imported finished commodities which enjoy a zero%  tariffs dominating local markets.

“We hope the playing field can be leveled for the benefit of us,” said Ms Magama.

While Government is also in consultations with industry on production levels, industrialists however say the zero rating of imported commodities will facilitate a competitive edge on quality and prices for local goods against imports.

 

Zimbabwe National Chamber of Commerce (ZNCC), Economist Mr. Kipson Gundani believes a viable operating climate characterised by low productivity costs will benefit manufacturing companies.

 

“Government should be committed to the local industry,” added Gundani.

An industrialist Mr. Danny Masukuma says, apart from being protective to local companies, government should ensure that firms increase production through incentives that lower overheads.

“We need the duty to protect local firms,” said Mr Masukuma.

Of concern has been the unethical conduct by local companies who when given a lifeline by government normally abuse that privilege by charging exorbitant prices.

 

However, with the future pointing to a regional Preferential Trade Area, the advantages of supporting the local manufacturing sector far outweigh the disadvantages.