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Africa Moyo Business Reporter
AS confidence in the country’s new administration continues to rise, Government has sealed a $2,6 million grant with Comesa to support the leather and clothing sectors. The sectors have been clamouring for huge cash injections to turnaround their operations, which have been in the doldrums for a long time.
Although the terms and conditions of the grant could not be immediately established, Deputy Minister of Finance and Economic Planning Terrence Mukupe, yesterday said the $2,6 million will go a long way in bailing out the leather and clothing sectors.
“Last week I was sent to Zambia to sit down with Comesa because there is a grant that we were applying (for) from Comesa and we were actually successful in getting the grant. The grant is going to facilitate the hides-to-leather value chain where we want to set up about three to four hubs and it’s also going to facilitate the cotton-to-clothing as well,” said Deputy Minister Mukupe.
This comes as the leather industry is operating at below 50 percent capacity due to a plethora of challenges, chief among them being cash shortages, resulting in waning demand for leather products. Raw material shortages are throttling the leather industry.
The Abattoirs Association of Zimbabwe says the leather sector has not recovered since Government introduced a levy on exports of raw hides to encourage value addition in 2014. In the 2014 National Budget, Government announced a 75c levy tax on the exportation of raw hides as part of measures to promote beneficiation in the leather sector.
Statistics from ZimTrade recently suggested that since 2012, the country’s exports of leather products have been plunging. In 2014, Zimbabwe exported leather products worth $374 000, down from $591 000 in 2012.
Government has crafted the Zimbabwe Leather Sector Development Strategy, which runs from 2012 to this year, which seeks to ensure the sector generates $116 million revenue by 2017 compared to $82 million in 2011.
Similarly, the clothing sector has potential to push up employment levels to 25 000 from the current 7 000 if all sectors of the economy procure locally. At the moment, several private and publicly owned companies are importing corporate wear, prejudicing local firms.
Zimbabwe Clothing Manufacturers’ Association (ZCMA) chairman Jeremy Youmans, this week said the clothing industry presents a great opportunity for the country to create more jobs, especially from value addition. Currently, Zimbabwe exports 98 percent of its cotton lint, with most of the cotton yarn exported to South Africa.
Youmans believes a market-driven approach would develop the whole value chain, including the production of edible oils and animal feed as by-products of the cotton seed. ZCMA says the largest bottleneck in the growth of the clothing sector is a lack of access to competitive raw materials, mainly fabric.
The clothing sector is also being negatively impacted on by massive imports of new finished clothes and second hand clothes, putting the local sector on the brink. Government and players in the sector have agreed to create the Association of Cotton Value Adders of Zimbabwe (ACVAZ) in order to coordinate the cotton-to-clothing strategy (2014-2019).
Online Reporter