daniel chigunweBusiness Writer/NewZiana
Government has with immediate effect suspended duty on all single and double cab semi-knocked down (SKD) motor vehicles kits as well as for buses imported before November 28, 2024 by approved automakers.
In a Statutory Instrument 194 of 2024, Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, announced customs duty had been suspended to a rate of zero percent on SKD single cab and double cab motor vehicle kits imported or taken out of bonded warehouse by an approved assembler for use in the making of single and double cab motor vehicles.
“Customs duty is suspended to a rate of zero per centum on SKD single and double cab motor vehicle kits imported or taken out of bond by an approved assembler for use in the assembly of single and double cab motor vehicles in terms of this section for a period of five years from 1st January, 2025 to 31st December, 2029,” the Statutory Instrument said.
The SI further stated that with effect from January 01 2025, duty suspension shall only apply to public service buses that were purchased on or before November 28, 2024 and cleared for consumption by February 14, 2025.
“Thereafter the suspension of duty provided under this section shall cease and duty shall be payable on all public service buses imported into Zimbabwe,” said the SI.
The duty suspension will likely result in a drop of prices of the vehicles covered and creation of direct and indirect jobs.
The Zimbabwe Industrial Reconstruction and Growth Plan (ZIRGP), a short-term economic manufacturing blueprint, outlined specific policy interventions designed to stimulate domestic production of buses and trucks.
However, the policy needs measures to support it and Mthuli’s decision to suspend duty on the MKDs is one of the many interventions needed to support local firms.
The ZIRGP, running from October 2024 to December 2025, proposes repealing Statutory Instrument 138 of 2022 and reimposing a 40 percent duty on Completely Built-up Units (CBUs).
It also suggests a 10 percent duty waiver on SKDs kits for local assembly, enforcement of local procurement of assembled vehicles and securing an offtake agreement to secure markets.
The plan also aims to attract private investment into tyre manufacturing and offer incentives to maximise return on investment.
If implemented, the plan projects 100 locally assembled buses and 80 trucks per year, saving over US$12 million and creating over 300 jobs across the value chain. For instance, the tyre sector, primarily composed of re-treaders, importers, distributors and retailers, is currently operating at below capacity due to low demand.
This has resulted in annual tyre imports of approximately US$52 million.
Established about 50 years ago, the local automobile industry has historically proved to be a strategic sector in terms of meeting motor vehicle demand in the country.
“Government is the single largest importer of finished buses and deliberate efforts to scale up local procurement will be pursued,” said ZIRGP.
“Through Dinson, the sector will be able to manufacture chassis and frames for trucks and buses by mid-2025.”
Zimbabwe launched the Motor Industry and Development Policy (MIDP) in 2018, targeting to attract 10 percent of total foreign direct investment (FDI) into the automotive assembly and components manufacturing sector by 2030.
The policy also seeks to achieve full capacity utilisation and boost employment levels. Despite these ambitious goals, the MIDP has yet to significantly stimulate the industry.
The automotive sector continues to face challenges, hindering its growth and development. Zimbabwe’s three main vehicle assemblers, Quest Motors, Willowvale Motor Industries and Deven Engineering, have long advocated for policies promoting local truck and bus procurement, especially by Government entities.
While a 2014 Government directive mandated local bus and truck procurement, many State-run entities continued importing mainly from China. Analysts believe a deliberate policy promoting local bus production and procurement is crucial, especially as the country seeks to revamp public transport through recapitalisation and ZUPCO, now under Mutapa Investment Fund.
Bongani Ndlovu