Zimbabwe Manufacturing Sector Struggles Financially, Calls for More Budget Support

CZI President Urges More Funding for Zimbabwe's Industry Ministry Amid Economic Challenges

by Adenike Adeodun

Kurai Matsheza, President of the Confederation of Zimbabwe Industries (CZI), has called for increased financial support for the Ministry of Industry and Commerce. This appeal comes in the wake of the manufacturing sector’s underperformance due to various challenges, including power outages, capital decline, water shortages, and rising taxes, which have escalated the costs of doing business.

The 2024 national budget, presented last week, allocated ZWL$130.5 billion to the Industry and Commerce ministry. This allocation falls significantly short of the ministry’s prebudget bid of ZWL$306 billion, leaving a funding gap of nearly ZWL$176 billion.

In an interview at a post-budget seminar in Harare, Matsheza said, “The budget allocations for the industry fall short of the demands. While the available envelope dictates the allocation, much more could have been done to support the sector.”

Matsheza pointed out that the manufacturing sector is grappling with high operational costs due to increasing taxes and the growth of informalisation. “We need more concrete actions to mitigate these challenges,” he added.

The seminar, hosted by CZI, Chamber of Mines of Zimbabwe, Ernst and Young, Zimbabwe National Chamber of Commerce, and Bankers Association of Zimbabwe, discussed these pressing issues.

According to a report by Newsday, Matsheza suggested introducing a permissive tax to encourage compliance within the industry. “A permissive tax, say 3%, for non-compliant traders could be remitted to the Zimbabwe Revenue Authority. This could simplify the process and promote better compliance with regulations,” he explained.

He also called for a simplification of the registration process for traders, especially concerning value-added tax (VAT) compliance. “The current registration process is cumbersome, involving multiple authorities and time-consuming steps,” Matsheza said.

Furthermore, he emphasized the need to address exchange rate issues to alleviate the cost of doing business in Zimbabwe. “Unless we control the exchange rate, inflation will continue to rise. We urge the authorities to consider our concerns seriously,” he urged.

Matsheza expressed gratitude to the Finance Ministry for acknowledging the industry’s challenges. “The Treasury’s willingness to hear us out and consider revising their position is commendable,” he concluded.

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