THE government is offering various incentives to promote productivity as a measure to support the manufacturing industry and ease pressure on the sector, Finance, Economic Development and Investment Promotion minister Mthuli Ncube has said.
In an interview yesterday, Ncube said the government was gradually making strides to relieve companies which import raw materials.
This comes as plastic pipe manufacturer Proplastics Limited yesterday raised concern over the company’s export performance.
Its export performance has been facing huddles due to high cost of production and infrastructure gaps, resulting in uncompetitive pricing and reduced market competitiveness.
“It is in our plans for us to continue to support our manufacturing sector. It creates jobs. We get revenue from it as a fiscus for the entire economy. So we want to extend incentives,” Ncube said while touring the Proplastics’ manufacturing plant.
“Many, several incentives exist. We have the VAT [value-added tax] deferment incentives, which allow companies to be able to import equipment. Of course, companies want us to lower that threshold, we will look into that.”
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He said this had gone a long way in making sure companies import equipment without being overburdened with VAT, adding that start-up companies could also utilise the National Venture Capital Fund to expand the manufacturing sector.
“A good example is a company, for instance, like Glime Time, which is benefiting from the National Venture Capital Fund,” Ncube said.
“So government is very serious about supporting our manufacturing sector to make sure that it contributes fully to the development of the economy and create jobs.”
Proplastics finance director Paschal Changunda said the business was facing several challenges which required government intervention.
“In terms of challenges, yes, we certainly do face some challenges. The first one is the export performance. When we are talking about the economy, exports become an area of focus,” he said.
“Our exports are being hit by our high production costs, in terms of commodity markets. You talk of power. It’s very high. Our average rate is 18 cents per kilowatt hour. Now it’s 23,7 cents per kilowatt hour.
“If we compare with the region, we are about three times when it comes to pricing even beyond the region. That becomes a real challenge.”
However, Changunda said the infrastructure gap in the industrial areas especially with regards to roads was also impacting business.
“The other issue I would mention on the exports is the infrastructure. I want to applaud government for the infrastructural development, the roads, dams and the water pipes across Zimbabwe,” he said.
“We appreciate it, but if you look at the roads here and other industrial areas, which our clients use and where I have to run the distribution trucks, it is almost like we are forgotten. So it is certainly an area of concern.”
He said government retained the 25% export retention that had become a challenge.
“We have that challenges that we have. Already, my competitiveness is eroding. And then it becomes especially tough when the other market is so different from the US,” he said.