Call to review Industrial Policy

09 Dec, 2018 - 00:12 0 Views

The Sunday Mail

Dr Gift Mugano

The Transitional Stabilisation Programme (TSP) identified the industrial policy as a key policy which should be developed to create the production base for substituting imports whilst at the same time building the export capacity.

The current industrial policy expired in 2016 and as such, its review is long overdue.

In reviewing the industrial policy, the Ministry of Industry and Commerce should focus on industry resuscitation strategy, backward integrated strategy as well as local content enhancement measures.

With respect to the resuscitation of the industry, two key things are important. First, there is need for provision of cheap loans for retooling. Government must ring fence money collected from duty paid in foreign currency with a view of making it available for retooling.

In the 2019 national budget statement, the Minister of Finance and Economic Development Professor Mthuli Ncube declared that duty for motor vehicles, selected agricultural and manufactured products will be paid in foreign currency. In the same vein, companies charging in US dollars will also pay related taxes in foreign currency.

In pursuit of these measures, the Finance Ministry must ring fence this money and avail it in the productive sectors. This is where the Ministry of Industry and Commerce, through its industrial policy, must come up with priority sectors and the quantum of foreign currency which is required for retool. The sector receiving the funds must deliver the expected outcomes in the stipulated time frames.

ln line with the argument above, the Ministry of Industry and Commerce, in its industrial development policy, must come up with a priority list for foreign exchange allocation which should reinforce import substitution and encourage exports. This list should inform the foreign currency allocation committee to avoid wastage or improper allocation of the scarce resource.

Zimbabwe is largely an agro-based economy. About 70% of its raw materials come from the agricultural sector. In this regard, the Ministry of Industry and Commerce should come up with a backward integrated policy which will be part of the industrial policy. It must have a comprehensive threshold which must be met by companies to meet fiscal incentives.

In his budget statement, Prof Ncube made an undertaking that he will come up with fiscal incentives aimed at supporting companies supporting local production. Hence, the need for a backward integration policy is urgent. Companies in the dairy sector such as Dairibord and Nestle have a long history of supporting farmers through the dairy resuscitation strategy. The same can be said about Delta Beverages, Seedco and Tanganda tea. In practice, backward integration has been taking place through contract farming and out grower schemes but the policy incentives are elusive. This is the time to do things right.

The Ministry of Industry and Commerce is working on a local content policy meant to encourage production of local goods, consumption of locally produced goods and job creation. This ongoing work, among other things, must aim to enforce these three tenants through legislation and various incentives. For example, for one to qualify for fiscal incentives or access to foreign exchange and affordable funds for retooling, they must meet the minimum local content threshold set by the Ministry of Industry and Commerce.

In reviewing the industrial policy, the Ministry of Industry and Commerce must mainstream industry resuscitation, backward integrated strategy and local content enhancement measures.


Dr Mugano is an author and expert in trade and international finance. He is a Research Associate at Nelson Mandela University, Registrar at Zimbabwe Ezekiel Guti University and Director at Africa Economic Development Strategies. Feedback: Cell: +263 772 541 209. Email: [email protected]


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