Current trade policy comes under review

THE government is in the process of reviewing the country’s Industrial Development Policy and its accompanying National Trade Policy that are set to expire at the end of the year.

The appraisal of the policies could benefit the local manufacturing sector and Zimbabwe’s external trade in view of indications that the new policies will be coordinated with investment policies.

Industry and Commerce director for Enterprise Development Florence Makombe said a review of the policy is underway but was not privy to when consultations would begin.

“In view of the coming to an end of the Industrial Development Policy (IDP) as well as the National Trade Policy (NTP), the ministry is reviewing the policies with a view to formulate new investment policies for the period 2017-2021,” she said.

The present IDP has not been successful if at the moment capacity utilisation levels in the manufacturing sector are anything to go by.

When the IDP was promulgated in 2012, the local manufacturing sector’s capacity utilisation levels was around 45 percent and this has worsened to 34,3 percent last year according to the Confederation of Zimbabwe Industries (CZI).

This was so despite some positive signs.

The manufacturing sector managed to reverse its fortunes after contracting by 0,6 percent and 5,1 percent in 2013 and 2014 respectively, to recording a growth of 1,6 percent in 2015.

Capacity utilisation however shed 2,2 percentage points from 36,5 percent in 2011 to 34,3 last year.

Observers note that the factors affecting industry and limiting capacity in the manufacturing sector remain unchanged with industry players citing low domestic demand, working capital constraints, power outages, competition from imports and antiquated equipment and machinery breakdowns as the major constraining factors.

The development of an IDP is typically accompanied by a trade policy is so far as the former deals with productive capacities of an economy, while the latter determines strategies and policies that facilitate exchange.

At present, Zimbabwe’s external trade has been better.

At the close of 2015, Zimbabwe’s exports were projected at $3,5 billion against imports of $6,3 billion showing a trade deficit of $2,9 billion that worsened from a deficit of $2,7 billion in 2014. – BH24.