CONFEDERATION of Zimbabwe Industries (CZI) president Kurai Matsheza says more funds should have been allocated to the Industry and Commerce ministry to support the growth of the manufacturing sector after it was allocated less than half of its requirements.
The call comes as the manufacturing sector has been underperforming owing to power cuts, a decline in capital, water shortages, rising taxes and growing informalisation which have all resulted in high costs of doing business.
In the 2024 national budget presented last week, ZWL$130,5 billion was allocated to the Industry and Commerce ministry to support development and implementation of industrial policy and the retooling of the manufacturing sector.
This is against a prebudget bid of ZWL$306 billion, leaving the Industry and Commerce ministry underfunded to the tune of nearly ZWL$176 billion.
“Obviously, in terms of the budget allocations to the industry and the demands that were coming forth from each particular ministry, the Industry ministry engaged us in preparing their request, addressing the fact that they did not get what they wanted and had requested. However, this depended on the available envelope, but more could have been done,” Matsheza said, in an interview at a post budget seminar yesterday in Harare.
“The cost of doing business is too difficult and some of the issues that we highlighted in the meeting were concerning the taxes, increase in informalisation in the country and the burden that is falling on the manufacturing sector. There is more that needs to be done.”
The post-budget seminar was hosted by CZI, Chamber of Mines of Zimbabwe, Ernst and Young, Zimbabwe National Chamber of Commerce and Bankers Association of Zimbabwe.
Matsheza said a permissive tax was supposed to be introduced to promote compliance in the industry.
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“There must be a way to come up with a permissive tax to say a guy who does not comply with the regulations must be charged an extra tax, let’s say, 3% that will be remitted to the Zimbabwe Revenue Authority instead of going through all the paperwork to trade directly with the manufacturer,” he said.
He said registration for traders for value-added tax (Vat) compliance to trade with manufacturers was complicated and suggested the paperwork be reduced to aid compliance.
“The registration itself is not a simple process because it does not start with Vat compliance, but it starts with the trading licence itself. The trader himself has to go through so many authorities to complete registration, which takes time,” Matsheza said.
He said issues around the exchange rate had to be addressed to ease the cost of doing business in Zimbabwe.
“Another area is that something has to be done on the expenditure side of the budget because it is affecting the exchange rate,” Matsheza said.
“If the exchange rate issue is not addressed and brought under control, it will drive inflation up. We urge authorities to capture our concerns to make sure that they do something to reduce the cost of doing business in this economy.”
He expressed appreciation to the Finance ministry for listening to the concerns of the industry with a view to address them.
“What we appreciate is the acceptance by the Treasury to say that they are hearing us,” Matsheza said.
“They have come forth with a proposal for us to bring issues and document concerns to them. And, they are prepared to look at them and come back with a revised position.”