Industry wants the government to introduce a raft of measures to quicken economic recovery and manufacturing currently facing a myriad of challenges.
Among measures being advocated for are the introduction of import duty on all goods and services coming into the country over a certain incubation period to allow local industries to recapitalise.
This is expected to assist local companies ramp up production to meet local demand.
“Armed with this protection, industry will employ more people to produce more for consumption, hence growth will be realised,” said Confederation of Zimbabwe Industries (CZI) in its 2011 manufacturing survey.
Capacity utilisation of the manufacturing sector is now around 57,2%.
The manufacturing sector faced challenges of low demand, machine breakdown, shortage of working capital and lack of raw materials.
Overall output volume growth for the sector increased by 14,1%, with 68% of the respondents having recorded a positive growth while 32% recorded a decline in output.
The survey showed exports were still depressed with Zambia being the top export market for the country with 29%.
According to CZI there should be greater access by all economic sectors to lines of credit and introduction of export incentives. This was likely to result in increased liquidity and cash in circulation.
“A cast-iron guarantee should be made that any reintroduction of the Zimbabwe dollar will be purely voluntary. This will boost confidence and lower interest rates,” said CZI.
It said the indigenisation and economic empowerment law should be amended in a manner that brings about transparency, as it has remained the key stumbling block to Foreign Direct Investment (FDI) flows into the country. The industry body said restoration of property rights in a modern free-market economy was critical to encourage FDI, growth and equal opportunities for all citizens.
In addition there is an urgent need for significant investment to upgrade infrastructure, boost water and electricity supplies in order to improve capacity utilisation.
Due to several businesses being undercapitalised, CZI called for the introduction of tax incentives based on business growth criteria to assist companies regain scale and competitive age in the face of increased inflows of imported goods, which would otherwise be manufactured locally.
Also critical according to CZI capacitating financial institutions to provide more long-term funding at reasonable interest rates in order to finance the acquisition of equipment, conducive environment to attract inward investment and to review the tax policy.
“The government must avail more and cheaper long-term credit through bilateral agreements to enable companies to access funds for recapitalisation at viable rates,” added CZI.