The Sunday Mail
Dr Mike Bimha
I would say SI 64 and measures put in force by the RBZ were the major contributors to the reduction of the import bill. SI 64 has also contributed to the increase in revenue collected by ZIMRA.
When we introduced SI 64, there was a lot of hullabaloo from inside and outside the country. We understood the concerns from outside the country because the legislation was going to affect the revenue of our neighbours, mainly South Africa.
We held some meetings with our counterparts from South Africa and we cleared the air on some issue.
They told us that the private sector in their country was putting pressure on them to retaliate.As a result some border traders suffered for some time, as they could not conduct business as they used to.
We also had those that criticised us saying there was no point in supporting an industry that was on its knees. However, we were convinced that in order to heal our industries, we had to swallow the medication, no matter how bitter the pill was.
I am glad to say that the bitter pill that we swallowed is producing results and slowly but surely, our industries are getting healed.
We have set up a Monitoring and Evaluation Committee comprising mainly players in the private sector.
Their task is to compile a report detailing the success and challenges that came as a result of SI 64. We want to take a full stock of the results that SI 64 has brought on the ground.
Although the report is work in progress, we have received positive feedback from many companies. Our offices has been inundated with calls from companies thanking us for bringing this legislation.
We also have request from companies that want us to add more goods under SI 64. The feedback has been really overwhelming. The positives of SI 64 can also be seen in the context of the import bill which was reduced from US$6, 3 billion in 2015 to US$5, 2 billion in 2016.
Although it is inaccurate to say that SI 64 was solely responsible for the reduction in the import bill, we can safely say that the restrictions under this legislation contributed significantly.
I would say SI 64 and measures put in force by the RBZ were the major contributors to the reduction of the import bill.
SI 64 has also contributed to the increase in revenue collected by ZIMRA. There has also been an increase in capacity utilisation and employment for all the products placed under SI 64.
CZI’s manufacturing sector survey showed that the average manufacturing capacity utilisation increased from 33, 4 percent in 2015 to 47, 4 percent in 2016.
Some of the examples of sectors that have increased capacity utilisation are personal care products companies, Datlabs and Prochem. Prochem for example, increased its workforce from 41 employees to more than 100 employees.
Datlabs was on the verge of downsizing and just before introduction of SI 64, it had proposed to reduce salaries and to reduce working hours to four days but also this was shelved and the company started picking up.
The tyre manufacturing industry increased its capacity from 30 to 60 percent after SI 64. Synthetic hair fibres increased capacity utilisation from 28 to 60 percent while the furniture sector had an upturn from 45 to 70 percent.
The tinned foods sector has recorded a jump in capacity utilisation from 38 percent to 80 percent. Nestle, which produces a number of restricted products such as powdered milk, increased its production from 25 percent to 70 percent.
There have also been a number of new investments that have responded to SI 64. Arenel commissioned a manufacturing plant worth US$750 000. They also invested in a mayonnaise and bottled water plant worth US$2 million.
Kershelmar Dairies also invested new equipment worth 146 million rand. ProBrands invested US$1, 6 million in a new dairy processing plant worth US$1, 6 million.
Associated Foods invested US$400 000 for a peanut butter manufacturing plant. Willoton Group of Companies invested U$40 million into a cooking oil and soap manufacturing plant.
Dendairy also commissioned a machine with an annual processing capacity of 60 million litres of milk, which is half of the total annual milk production.
We have also had challenges associated with implementing SI 64. These include the depressed aggregate demand and delays in foreign currency payment to suppliers of raw materials.
We still have a voluminous appetite for imports by some consumers, related to that is the incessant smuggling of goods through border posts.
An inter-ministerial committee, chaired by Minister of Home Affairs, Dr Chombo, is seized with constantly coming up with new measures to curb smuggling.
There is also the challenge of monopolistic behaviour by local producers, causing a rise in prices. However, the issue of steep prices relates to just a few isolated incidents and a report which was done by my Ministry has shown that there is no need to raise alarm on the issue of prices.
Going forward, we want to reinforce SI 64 by introducing a local content policy. I am also happy that the Reserve Bank of Zimbabwe is coming in a big way to support companies that benefited from SI 64 so that they get more funds to retool. This is a very positive development for us because the whole idea of SI 64 is to get the manufacturing companies revived.
Out of 10, SI 64 has scored eight. It has gone beyond our expectations and I am convinced that introduction of this legislation has achieved the goals of improving industrial capacity, luring investment into depressed industries and most importantly, stemming company closures.
Minister Bimha was speaking to The Sunday Mail Chief Reporter, Kuda Bwititi.
