Industry exert pressure on Treasury

LIVINGSTONE MARUFU

 

Industry is putting pressure on the Treasury to provide a financial rescue for the industrial value chain, as the US$22.5m ran out without helping a significant number of local businesses.

This comes after the International Monetary Fund gave Zimbabwe a windfall of approximately US$1bn two years ago to aid in the recovery of the country from the catastrophic COVID-19 pandemic.

But only US$22.5m was released to the industrial value chain by Minister of Finance and Investment Promotion Mthuli Ncube.

Industry leaders demanded this week that Treasury allocate additional funds to support the struggling sector and boost capacity.

Kurai Matsheza, president of the Confederation of Zimbabwe Industries, told Business Times that in order to boost production, the government ought to augment funding for the value chain.

“To be honest with you, very few individual companies managed to benefit from this (US$22.5m) funding and for this financing to have an impact, there is a need to increase the  amount so that many players can benefit,” he said.

In the Zimbabwe National Chamber of Commerce’s (ZNCC) Treasury submissions for the 2024 national budget, it stated: “The government of Zimbabwe is also urged to actively pursue industrial policies and the development of regional value chains and enhance the capacity of the private sector to tap into regional and global value chains as espoused in NDS1. Also, enhancing the efficiency of the capital markets will facilitate and allow capital to move where it works best. Accordingly, the need for policy coherence especially on fiscal, monetary, and national trade policies cannot be overemphasized,” ZNCC said.

Initially, the cotton sector value chain was promised US$10m, while the leather industry was to receive US$10m.

The pharmaceuticals industry and the other agro-processing sectors were promised US$5m each.

All that changed, though, when Ncube gave out US$22.5m rather than the US$30m he had initially pledged.

The National Development Strategy (2021–2025), whose top goals include “the development and strengthening of value chains and structural transformation,” sets the direction for Zimbabwe’s development agenda.

This is complemented by the country’s National Industrial Development Policy.

Globally, experts said, the growth of local value chains supports economic development, especially by bolstering local industry and creating jobs.

It is anticipated that this will offer a rational structure for creating capacity development plans and intervention strategies for producers. Moreover, value chains are naturally scalable.

Studies show that the value chains will reduce production costs by reducing the import bill and making products more affordable.

Experts emphasized that developed value chains can help Zimbabwe overcome some of the economic difficulties caused by dysfunctional value chains, which have seen potential revenue  leaching out of the country  in the form of raw materials.

 

 

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