‘Bulawayo industry needs more incentives’

Business Editor

GOVERNMENT should come up with an incentive package, including tax-free holidays, to lure big investors to Bulawayo as part of measures to revamp the city’s manufacturing sector, an industry expert has said. 

Although the city remains the country’s industrial hub and has been declared a Special Economic Zone (SEZ) for manufacturing, several firms are struggling amid operational challenges and high costs. Due to forex shortages and incessant power cuts, capacity utilisation for most companies has dropped to about 30 percent from 48 percent last year, according to the Confederation of Zimbabwe Industries (CZI).

Speaking on the issue in Parliament, Zimbabwe Pharmaceuticals (ZimPharm) managing director, Mr Tavengwa Mukuhlani, said the prevailing regulatory environment makes it difficult to revamp companies in Bulawayo and the country as a whole. He said more incentives were needed to attract investors to the country’s second biggest city.

“The industry in Zimbabwe is affected by policy and regulatory framework. Our regulatory framework is so stringent that it creates high entry barriers into industry.

“We need to relook at our regulatory framework, we need to incentivise local businesses that are reviving businesses that had collapsed,” said Mr Mukuhlani, who is also a legislator for Mhondoro-Ngezi constituency.

“For instance, in Bulawayo, the infrastructure is there. There are business people in Zimbabwe who are investing in Bulawayo. What is the problem with these business people who are investing in Bulawayo? 

“The problem that is in Bulawayo today is that when you go to revive an industry in Bulawayo, your first visitor is NSSA, your second visitor is ZIMRA and your third visitor is ZESA. 

“So, before you start reviving an industry or business in Bulawayo, which is supposed to be our industrial hub, you have entry barriers from within our own system. These need to be dealt with seriously. Companies investing in Bulawayo insted need incentives such as tax-free holidays. There must be a moratorium to pay NSSA for those arrears that existed before these industries were liquidated. So, our regulatory framework needs to be looked at.”

Mr Mukuhlani said the pharmaceutical industry for example, was importing more than it manufactured in terms of pharmaceutical products. 

“Our regulatory framework for registering of medicines and opening of pharmaceutical companies here is more stringent than it is in the United States of America, the United Kingdom, New Zealand and Australia, yet we are the poorest. So, we need to look at this framework and say, ‘does it apply to us?” he said.

Given that the country has been operating under economic sanctions for more than a decade, which increases its risk profile and reduces access to private sector funding, Mr Mukuhlani said policy and regulatory environment must be more sensitive to industry’s needs. 

“We have got a regulatory framework that is meant for a normal functioning country but we are not operating in a normal environment. We need to get back and say, ‘the requirements that we put on our industries, for instance from EMA, are they for a country that is under sanctions or for a country that is not under sanctions?” he said.

“So, we need to make that conscious decision to say, ‘what do we want?’ we have a regulatory framework that is meant for a first world country. We are a third world country that is not only a third world country but operating under sanctions.”

Finance and Economic Development Minister, Professor Mthuli Ncube, has also concurred with Mr Mukuhlani that transforming the industry fortunes requires aggressive policy reforms, more than budgetary allocation or increasing funding to companies.

“For as long as these issues are not dealt with and dealt with in a holistic manner, we will still be here discussing that there is no industrialisation. So industrialisation is linked to the regulatory framework of a country of which our regulatory framework has higher specs than what we can afford,” said Mr Mukuhlani. Guided by the Transitional Stabilisation Programme (TSP) Government is already seized with reforming the investment climate to promote ease of doing business. The initial steps have this year seen Zimbabwe climbing 15 steps up from 155 to 140 out of 190 countries in the World Bank global ease of doing business rankings. President Mnangagwa has declared that Zimbabwe is open for business and the Government’s vision is to have an upper middle-income economy by 2030.