Improve exporters’ incentives, ZimTrade tells Govt

competitive incentives to local exporters.
“A number of countries in the region, for example South Africa, have much more comprehensive export incentive schemes hence they tend to be more competitive.
“Our export incentives need to be effective and relevant to the present trade dynamics,” she said. The call comes as the Government has indicated that it is in the process of developing new export incentives in line with the new National Trade Policy.
“Government will review the existing export incentives and modify them where necessary in consultation with the relevant stakeholders including industry to make them more effective and relevant to the changing and dynamic business environment.
“Incentives such as the Duty Drawback System for raw materials imported to manufacture goods for export will be re-introduced.
“Full retention of export earnings will be maintained during the policy period,” said the Minister of Industry and Commerce, Professor Welshman Ncube, in the NTP document.
The anticipated new incentives should run until 2016 when the NTP comes full circle.
Zimbabwean trade has generally suffered from uncompetitiveness in the region with other countries offering better export incentives for their producers.
The South African government, for example, provides various incentives to South African firms to export their products internationally, and chief among them is the Export Marketing and Investment Assistance (EMIA) scheme, which compensates exporters for costs involved in developing export markets for South African products.
The South African government in particular has a deep appreciation of the value of trade finance as a major drive of export growth.
Its other incentives for exporters include export credit incentives, export credit insurance and customs and excise duty refunds.
Trade financing is particularly important in Zimbabwe insofar as the majority of companies are in need of funding to retool and increase production capacity.
For exporters trade finance has implications in terms of both trade credit and risk assurances. In respect of the latter, Prof Ncube said the Government would resuscitate the Export Credit Reinsurance Fund, which will help “instill and restore exporters confidence to enter new markets”.
At the same time the country is set to join the African Trade Insurance Agency, which is a regional institution that provides export credit, political risk and investment insurances.
An analysis of Zimbabwe’s present trade basket reflects poor export performance on the part of the country’s manufacturers, as most exports are extractive products.
The mining sector is currently the largest contributor to export earnings at around 50 percent of total exports followed by agriculture.
The Government is targeting to increase export earnings by at least 10 percent annually, from US$4,3 billion in 2011 to US$7 billion in 2016. Ideally this should be accompanied by a corresponding increase in exports of manufactured goods.
This requires export-oriented industrialisation strategies, as envisioned in the five-year Industrial Development Policy and the NTP.
The objective of the IDP and the NTP is to restore the manufacturing sector’s contribution to the country’s Gross Domestic Product from the current 15 percent to 30 percent and its contribution to exports from 26 percent to 50 percent by 2016.