Rebate suspension derails Industry projects

THE Confederation of Zimbabwe Industries (CZI) says the recent suspension of rebates on equipment and raw materials used by local manufacturers derails various initiatives industry is pursuing to capacitate their operations.

In an interview, CZI president Kurai Matsheza (pictured right), said his organisation had learnt of the lifting of the rebates by the Government, but it was not clear whether the latest development involved all capital equipment or goods covered under the Open General Import Licence.

“Obviously, the scrapping of rebates is negative in respect of capital equipment and raw materials that companies would need to bring into the country. This is in the sense that some of the projects by local industries may not take place including those which firms would have already started on before the suspension of rebates.

“As CZI, we are following it up so that we get to know which goods have been affected and for what reason,” he said.

One of the companies that has been affected by the suspension of rebates is the mining and industrial equipment supplier, Shepco Group.

In an interview on the sidelines of the CZI annual conference in Harare last week, Shepco Group chief executive officer, Dr Shepherd Chawira, said his organisation has temporarily suspended the importation of machinery under the firm’s US$5 million recapitalisation programme.

He said the machinery, which was due to be shipped into the country before the rebate was suspended comprised equipment used for conveyor roller manufacturing.

The group, which is headquartered in Bulawayo has announced its retooling programme that started a few years ago at two of its divisions, Shepco Industrial Supplies and Shepco BMA Fasteners.

So far, the holding firm had invested US$3 million into the retooling project with some of the plant and equipment imported from China.

“The machines are coming from China and we had to suspend that because we learnt that the Government cannot give us the duty rebates anymore.

“Once we hear from the Government in terms of the rebates, perhaps they are going to reconsider, if they don’t since we had ordered these machines, we might have then to sacrifice. But that might mean we might have to consider the balance of the recapitalisation programme and see how we are going to fund the duties and the VAT that goes with the importation,” he said.

Dr Chawira said Shepco Group did not know the reason behind the scrapping of rebates on capital equipment.

“But we engaged the Government and they are looking at it, that also flies in the face of retooling.

“We had worked with the premise that all the equipment that’s coming in will be duty free through that facility, of course all the equipment that has come through already has come in duty free.

“We now have a problem in the next consignment. In fact, we have actually engaged the Ministry now there was a shipment of machines that was supposed to have been done and when we discovered that we could not get the rebate, we had to stop that shipment whilst we are engaging the Government on the way forward,” he said.

“So, we really want the ministry to re-look at it. Rebates are just as good as loans, you know we don’t have money in our economy and our banks don’t have money to lend long-term finance for retooling and that really was coming in as great relief in terms of driving the retooling agenda.”

Meanwhile, Finance and Economic Development Minister Professor Mthuli Ncube has announced that the Government would soon launch a US$15 million package for industry retooling.

The facility was part of the US$145 million the Government would be realising this year to various sectors of the economy under the US$960 million Special Drawing Rights (SDRs) Zimbabwe received from the International Monetary Fund last year.-ebusinessweekly