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INDUSTRIALISTS have lauded proposals announced in the 2014 national budget aimed at stimulating production but emphasised the need for follow ups to ensure some of the measures do not backfire.The Minister of Finance and Economic Development Patrick Chinamasa announced a raft of measures targeted at enhancing declining productivity in an economy which is bordering on stagnation.
Among the instruments were a hike in taxes of certain categories of imports to protect local industry and scrapping of duty on raw materials to encourage local production.
But industrialists warned that the Government had to come up with programmes to finance revival of local production to ensure prices remained stable.
“The imposition of high taxes is going to result in prices of goods such as soap going up and this is going to hurt the consumers,” said one industrialist at a post budget meeting organised by the Confederation of Zimbabwe Industries (CZI) in Harare on Friday.
“I am not sure if we have addressed the root cause of the problem or we are just making life harder for the consumer.”
Zimbabwe National Chamber of Commerce vice president Davison Norupiri said it was important that the problem of leaky borders be addressed.
“As long as our borders are not capitalised to deal with smuggling, then the high tariffs will encourage smuggling.”
Smuggling of goods will mean that they lend in the country at lower prices to the disadvantage of Government, which will not be paid taxes as well as the local industry which has to compete with cheaper trafficked goods.
ZimTrade chief executive Sithembile Pilime said tariff imposition alone would not help the economy.
“We need to do something to ensure productivity improves by addressing the challenge of infrastructure and enablers,” she said.
Local industries are not only battling absence of working capital but also have to contend with shortages of electricity and water.
Declining production due to a combination of negatives affecting local industry has resulted in closure or scaling down of operations by a number of companies and loss of jobs.
The CZI estimated that local industry capacity utilisation dropped to 39,6 percent this year from 44 percent in 2012, warning of possible de-industrialisation.
Zimbabwe has become a net importer of basic goods at the expense of the local industry. But CZI immediate past president Kumbirai Katsande said it was difficult for the Government to fully address the dilemma.
“Government has an impossible task,” he said. “If you do not put duties you become a supermarket (for imports) but if you do, you increase the opportunities for smuggling.” – NewZiana
Online Reporter