Gvt seeks industry input into local content policy

13 Jan, 2019 - 00:01 0 Views
Gvt seeks industry input  into local content policy

The Sunday Mail

Golden Sibanda
Senior Business Reporter

GOVERNMENT will collect proposals from 300 firms to gather input into regulations that will govern local content thresholds for various sectors of the economy starting this year.

Industry and Commerce Minister Mangaliso Ncube told The Sunday Mail Business that Government was working with the private sector in formulating the Zimbabwe National Local Content Policy (2019-2023).

Minister Ncube said the draft document of the local content policy was now in place awaiting further input from proposals by the private sector, which has already confirmed collaboration with Government in the development of the policy.

“The ministry intends to conduct market studies to establish sector specific local content thresholds and development of measures to enhance local production,” Minister Ncube said last week.

“The objective of the study is to establish the capacities of local manufacturing sectors and determine in percentage terms, what can be produced locally (against), which can be imported,” he added.

Government has already collected proposals from 150 companies to determine what can be produced locally.

This comes as Zimbabwe is currently dependent on imports, which require significant amounts of the scarce foreign currency to bring into the country.

Minister Ncube said the local content policy was part of a number of imports management interventions his ministry was rolling out to keep Zimbabwe’s unsustainable import bill under check or even reduce it. Zimbabwe imported products worth US$5,87 billion in the first nine months last year, well ahead of the country’s major source of foreign exchange (exports), which totalled US$3,44 billion from US$4,86 billion in the first three quarters of 2017.

Policy benefits

Increasing local input in manufacturing will boost local industrial capacity and industrialisation, which will have positive effect of reducing imports while saving precious foreign currency.

“The ZNLCP is part of the country’s industrialisation policy and is aimed at promoting local value addition and linkages through utilization of domestic resources,” Minister Ncube said last week.

Targeted economic sectors

The ZNLCP will prescribe minimum local content or input into the manufacture of goods sold on domestic markets with the specific sectors, in which minimum thresholds of local material or input will be compulsory, having already been identified.

“The prioritised sectors are pharmaceuticals, oil seeds, grains and cereals, dairy, horticulture, clothing and textiles, leather and leather products, fertilizer and chemicals, rubber and articles thereof, soaps and detergents, articles of iron or steel, wood and timber, and packaging,” he said.

In crafting a local content policy Zimbabwe is not inventing the wheel, as its neighbour and largest trading partner; South Africa already has one, which prescribes minimum thresholds ranging from 30 percent to 100 percent for specific sectors.

Minister Ncube said that the study will provide insights on local content regulations in Zimbabwe and provide information that will be used in setting sectoral content thresholds, incentives and measures to enhance local content.

Industry weighs in

Government contends that it can support local industry without resorting to statutory instruments to regulate imports. Such options entail interventions such as local content policy to encourage citizens and local corporates to buy local products.

The Confederation of Zimbabwe Industries (CZI) president Mr Sifelani Jabangwe said industry has been pushing for a local content policy, which will compel prescribed local material in products sold in Zimbabwe.

“We are currently pushing for a local content policy to be put in place. Government is now just awaiting approvals to increase the amount of local content by Zimbabwean enterprises.

“It is a policy that we have been working on together with the ministry of industry,” he told The Sunday Mail Business in an interview last week.

The CZI president also said that Zimbabwe’s Procurement Act would give leeway for local industry to scale up production for increased consumption of locally produced goods instead of continued reliance on imports, which require forex.

It is believed that the increased consumption of local products has potential to drive Zimbabwe’s industrialisation agenda while at the same time whittling down the country’s trade deficit.

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