'Chinamasa should prioritise local content policy'

HARARE – Finance minister Patrick Chinamasa should consolidate the country’s local content policy in his National Budget presentation today to help steer industrialisation, Buy Zimbabwe has said.

The pressure group’s chief economist Kipson Gundani said the local content policy development initiative is necessary and should be completed timeously to revive industry. 

“We are therefore expecting the 2018 National Budget to re-affirm the commitment to a local content thrust as a critical policy tool to re-industrialise supported by the existing import control measures such as SI122 of 2017, promulgated by the Industry and Commerce ministry,” he said.

The local content policy is expected to stimulate the use of local factors of production, such as labour, capital, supplies of goods and services, technology, and research and development, to create value in the domestic economy.  

“We expect the government to put in place an incentive scheme for companies that will comply with local content requirements, including but not limited to production and productivity-related tax incentives, indigenisation credits and public procurement preferences, while non-compliance should attract structured disincentives,” Gundani added. 

Oxford economics research unit NKC African Economics said it is expecting Chinamasa to announce some reforms that aim to attract investment capital and to widen the tax base.

“Key target areas should be reforming or repealing the Indigenisation law, which has hampered investment, and scrapping the bond note scheme in favour of hard currency borrowed abroad,” the company said in a research note.

Economic policy to attract foreign direct investment and build up a tax base should focus on agriculture — which produces far below potential and where much land is essentially lying fallow, mining and services in general.

NKC also noted that President Emmerson Mnangagwa might be the right person to halt the country’s deteriorating economic situation.

“Although we have reservations about…Mnangagwa, who is reportedly implicated  in a lot of crimes that happened under the Mugabe government, and we worry about the prospects of a free and fair election in August, we are fairly confident in our expectation of economic reforms that will improve the business environment and attract investment,” the company’s analyst François Conradie said.

The Confederation of Zimbabwe Industries (CZI) said the need for policy certainty, consistency and coherence can never be emphasised enough and the creation of an enabling environment for business development is paramount.

“Based on our 2016 manufacturing sector survey, most respondents felt that currently, over and above the inconsistency, there also were too many restrictive policies and the economy needs major changes and a business friendly environment.

“There is need to ensure consistency and clarity of key policies, particularly indigenisation and other policies. We seem to be violating our own rules. For example, we’ve had multiple reports by the Auditor General (AG) but little movement on implementation of reports’ recommendations. Work by the AG has to be respected. The minister should respond and give feedback on findings and recommendations by the AG,” the country’s largest industry body added.