Govt set to launch a new Industrial Reconstruction and Growth Plan
HARARE – The government is planning an extensive restructuring of the industrial sector with the goal of increasing domestic production and lowering dependency on imported goods. This comes as the country’s trade deficit narrowed marginally in the six months to June to US$989.82 million from US$1.06 billion in the comparable year ago period.
Following a question from FinX during the post-cabinet briefing yesterday, Industry and Commerce Minister Mangaliso Ndlovu detailed the government’s goals, stressing a number of steps that will be executed under a new Industrial Reconstruction and Growth Plan.
The Industrial Reconstruction and Growth Plan is scheduled to be presented to Cabinet by the end of August and implemented over the next two years. It is regarded as a critical step towards revitalising the manufacturing sector and establishing a more self-sustaining economy.
A crucial component of the plan is to solve the deficiencies of a previously established US$22.5 million revolving fund for the industrial sector, which was derived from the IMF’s special drawing rights. Ndlovu expressed disappointment with the fund’s performance, stating that a committee is presently investigating the reasons behind its failure.
“There is a facility that has not worked very well which we are looking at, which was launched in 2022, as a revolving fund for the manufacturing sector. It was worth US$22.5 million, which was a guaranteed facility for the banks to then on-lend to the private sector. I have got a team that is looking into this because it really did not take off as well as we had expected,” he said.
To provide more accessible and affordable financing to the industrial sector, the government is bolstering the Industrial Development Corporation (IDC), transforming it into a development finance institution. This will enable the IDC to offer longer-term and cheaper loans to businesses, thereby stimulating growth.
“Cabinet has approved that the Industrial Development Corporation be strengthened to play its pivotal role as a lender to industry, a development finance lender, which then will give the capacity to lend fairly cheaper and also longer term financing. I think we will be also getting more pronouncements from the Minister of Finance because this will be funding that will come from the Treasury,” he added.
A detailed examination of the country’s import bill uncovered a concerning trend of rising imports while exports growth is at a slower pace. The minister emphasised the importance of value addition in agriculture and mining, noting that the government will work with the Ministries of Agriculture and Mines to create policies that maximise the benefits of these industries.
“We will be also directing that all ministries, government departments and agencies, procure local, and there will also be mechanisms to follow this. But in addition to this, we will be having a streamlined sector approach, processing agro-value addition, where we are working with the Minister of Agriculture to look at all their agriculture growth initiatives, so that we have commensurate strategies on value addition. The same will be done with our Mines and Minerals Department, where we will be looking at mineral value addition.
“This will be contained in the Reconstruction and Growth Plan. We have done a thorough analysis of our import pillars across the country. We have struggled to address the trade balance.”
The Minister noted that the government continues to incentivise the manufacturing sector, resulting in domestically produced goods occupying more than 80% of shelf space in supermarkets.
Some of the incentives implemented by the government include VAT deferment on equipment imported by specified sectors, as provided for by Section 12A of the VAT Act as read with Finance Act No.8 of 2022, which provides reliefs for periods ranging from 90 to 180 days depending on the value of the equipment, with a minimum of US$500,000.
The Secretary for industry and commerce, Thomas Utete Wushe said that furniture makers have benefited from tax breaks outlined in SI 3 of 2016, 158 of 2017, and 276 of 2028, as well as companies in the printing and packaging sector, which benefited from SI 152 of 2016. SI 161 of 2026 gave tax breaks for makers of sanitary gear, while companies that made soap and cosmetics benefited from SI 95 of 2013 and SI 155 of 2016, and those in the banking industry received tax breaks through SI 275 of 2018 and SI 10A of 2024.
The government also granted refunds to pharmaceutical, electrical, fertiliser, shoe, textile, and garment businesses.
Meanwhile, the country is pushing ahead with its de-dollarization strategy, as the government aims to strengthen the Zimbabwe dollar (ZiG). A roadmap outlining the actions required to make the ZiG legal tender.
To stimulate the use of plastic money and reduce economic distortions, the Reserve Bank of Zimbabwe will impose stricter licensing requirements on enterprises, including bank accounts and Point of Sale (POS) equipment. This move is aimed at combating the use of unofficial exchange rates by retailers and manufacturers, which has been destabilising the economy.-finx
