Budget offers no solutions: Industry

HARARE - The recently announced $4 billion 2014 Budget has evoked strong reactions from industrialists, who argue that it does not provide solutions to revive the country’s faltering industry, particularly in the face of slackening economic growth.

Market experts say Zimbabwe’s manufacturing sector — currently operating below 40 percent capacity — urgently requires close to $10 billion for it to remain active and competitive.

Out of the $4 billion, Finance minister Patrick Chinamasa said $3,5 billion will go towards recurrent expenditure, crowding out industry and other key economic revival sectors.

Kumbirai Katsande, Nestlé Zimbabwe chief executive, told delegates attending a Confederation of Zimbabwe Industries (CZI) post-budget review seminar last Friday that Chinamasa did not address challenges facing industry.

“I did not hear the minister (Chinamasa) emphasising enough on the word unemployment. We all know that some of our colleagues will not be coming back to work next year because their companies have shut down,” he said.

Katsande, also the immediate past president of CZI, noted that a few remaining operating companies are faced with prospects of high viability challenges next year.

Most Zimbabwean firms are struggling to survive due to antiquated machinery, erratic power suppliers, high finance costs and stiff competition from cheaper imports. Industrialist Callisto Jokonya added that government’s assertions on export incentives and salary increases gave a conflicting picture of the state of the country’s economy.

“I would like to know how the minister is going to balance the two because for the past few years we have not been exporting much as a country,” he said.

“The minister should have proposed a 50 percent reduction on salaries across the nation for us to be competitive.”

Chamber of Mines president Alex Mhembere also said while his organisation supports the notion of value addition enunciated by the government, there were concerns arising from the proposed increased royalties on export of raw platinum.

“Our concern is that the proposed three percent penalties on exports are coming at a time when the prices of most metals are going down,” he said.

Government will levy an export tax on unprocessed platinum and diamonds, with effect from January 1, 2015.

The budget will have to be funded by internal revenue as donors and the international community have withdrawn following disputed elections.

In his budget,  Chinamasa increased levies on petrol and diesel and imposed a tax on EcoCash, the mobile payment system that enables Econet customers to complete simple financial transactions such as sending money to loved ones. 

The decision by the government not to reform some of its controversial policies, particularly indigenisation, is likely to keep investment away.

Chinamasa explicitly announced that the empowerment programme is there to stay and there will not be any amendments.

But ignoring the downside, the Treasury chief said the country expects to attract $518,3 million in aid from foreign donors in 2014, up from this year’s $259,1 million, adding that government will reengage with creditors to resolve debt and unlock monetary support.

He also called on the removal of the sanctions and said the Diaspora provides $1,6 billion to the economy from remittances, something he would like to ‘tap into’.

The use of multiple foreign currencies, adopted in 2009 to replace a local dollar ravaged by hyperinflation, will remain for the foreseeable future, said Chinamasa, quashing reports of an imminent return of the Zimbabwe dollar.

He projected the economy to grow by 6,4 percent in 2014. Zimbabwe’s 2012 budget was $3,8 billion.

Comments (5)

If this government were doing this before they had no clue what needs to be done it would be understandable. What is irksome is THEY DONT GIVE A DAMN IF THE WHOLE SORRY BUNCH OF US were to sink into oblivion..they really wouldnt care less. ...and this is where our problems begin!

gutter poet - 27 December 2013

Apologies..the above should read, " If this government were doing this because..(not before)..."

gutter poet - 27 December 2013

You don't want the diaspora to vote, but you want their monies. Ha ha ha haa.

chipo - 29 December 2013

You are missing the fundamentals Minister!!!!!!!

The Patriot - 29 December 2013

But Chinamasa told you that you are no longer in their plans they have put plans for siya-so industries did you not hear him tell banks to take their business there and fund siya-so business. Ah guys you need to be serious turn your factories into flea markets and you will get profits that is what we call indigenise, empower, develop and employ.

Maita Manyuka - 2 January 2014

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