More incentives to drive value chains growth

Harare Bureau
FINANCE and Economic Development Minister, Professor Mthuli Ncube says the Government will continue to extend incentives to local industry to drive domestication of value chains while diversifying the export revenue basket.

The minister said the plans would see the financial capacitation of the Industrial Development Corporation (IDC) so that the state entity starts to equip strategic areas that will contribute to the agenda.

He further highlighted that the incentives to be given include rebates on equipment in order to create an environment conducive for business to succeed.

Zimbabwe export earnings are derived mainly from gold, diamond, platinum, and tobacco, which is confined considering the vast potential in other areas of the economy where it can earn more export proceeds.

Through the National Development Strategy 1 (NDS) Minister Ncube said the Government would focus on the provision of incentives to improve the appetite to enhance value addition for export.

The Treasury chief told stakeholders at a post 2022 national budget breakfast meeting this week that the incentives were meant to strengthen local value chains.

“To industry, we are going to give support through the Industrial Development Corporation (IDC), which is running a finance development arm, so that it starts taking equity on financing companies that it deems as strategic,” said Prof Ncube.

“We will be giving incentives for the value chain agenda. We want to domesticate value chains and we have given quite a bit of incentive in terms of rebate on equipment but generally to ease the economic environment  to companies that are undertaking value addition.”

He further cited cotton and leather value chains as an immediate port of call while pointing to the need to enhance the horticulture sector particularly the cultivation of blueberries and flowers.

Critically, Minister Ncube indicated that Vision 2030 of a middle-income economy would be enhanced if value chains were efficiently executed.

“Higher incomes are always possible if there is value addition in sectors such as agriculture, in NDS1 we would want to support that initiative, so if there are any incentives we can give to further beneficiation of what you are producing, always indicate.

“We are targeting the cotton sector value chain, especially garment manufacturing, we are also targeting the leather value chain, the other one is the horticulture sector, blueberries and flowers, we want to support the farming of those as well because they are export-oriented,” he said.

Speaking at the same event economist Persistence Gwanyanya implored the Government to explore and develop wider areas of potential in the economy so as to broaden revenue streams.

He called for a shift in the structure  of the economy particularly to move from the current state where export earnings were realised from a handful of companies thus making the system prone to manipulation and abuse.

“The fact that our economy is controlled by a few, just to give an example, out of the total exports earnings that come into the country more than 85 percent is contributed by five commodities, which are gold, platinum, diamonds, and tobacco.

“…because of that structural makeup it has also been difficult to deal with monetary issues in that foreign currency that  should liquefy the economy and deal with pressure on the currency is in the hands of a few, hence we have around US$1, 7 – US$1, 8 billion sitting in private nostros and not accessible to the rest of the economy,” said Mr Gwanyanya.

Zimbabwe’s most recent exports are led by gold, raw tobacco, ferroalloys, nickel ore, and diamonds but there remains a need to broaden this basket and tap into the potential of more resources abundant in the country including agricultural land.

The most common destination for the exports of Zimbabwe is the United Arab Emirates, South Africa, Mozambique, China, and Belgium.