eBusiness Weekly
Africa Moyo
Government has resumed discussions with the private sector in an endeavour to incentivise them through measures such as tax cuts so as to promote the creation of more decent jobs for citizens in line with “Vision 2030”.President Mnangagwa, who is spearheading “Vision 2030”, says Government intends to transform the economy into a middle income earner with a per capita income of $3 500.
As part of negotiations with the private sector, Government has proposed a raft of incentives for investors and a favourable tax regime, with the desire to promote investment and create jobs.
Finance and Economic Development Minister Professor Mthuli Ncube said investment is “a key driver in the transformation and development of our country”.
In the 2019 National Budget, Prof Ncube said Government desires to “raise the levels of investment” in the country, not only for production of goods and services and infrastructure development, but also as a conduit for jobs creation as well as skills and technological transfer.
“Further to our mantra, ‘Zimbabwe is open for business’, the measures we have kept sharpening for attracting, promoting and nurturing both local and foreign investment, are proving effective, as demonstrated by the value of projects negotiated standing at more than $15 billion,” said Prof Ncube.
“Government has opened up consultations with the private sector, with a view of identifying strategies for promoting job creation in the country.
“For its part, Treasury stands ready to put in place a taxation regime targeting job creation, especially incentivising investors, corporates and entrepreneurs.”
The manufacturing sector is seen as a major source for job creation and foreign currency earnings, particularly at this time when the country is in the grip of a fierce foreign currency pickle.
Currently, tobacco growing and mining – principally the gold sector – are responsible for generating the bulk of foreign currency for the country. The manufacturing sector’s contribution to foreign currency generation is negligible, despite the sector being one of the biggest consumers of the resource.
Bread and cooking oil makers require up to $20 million for the importation of wheat and crude oil every month for their operations while $12 million is required for electricity imports to power mainly the manufacturing sector.
Government believes the manufacturing sector provides scope for diversification, which is critical for cushioning the economy from various market risks.
Industrial capacity utilisation has averaged 40 percent between 2009 and 2017, and the 2019 Budget proposes implementation of a number of measures to address the challenges faced by the sector so as to help raise production capacity.
Prof Ncube said it was “imperative that we revive, transform, and grow the existing industry, that way, pushing up productive capacity utilisation”.
Specific measures proposed through the TSP and the 2019 Budget include negotiation for affordable medium and long-term lines of credit; promoting and strengthening value chains and linkages; export promotion; level playing field through removing distortions and promotion of competitiveness; and establishment of a Venture Fund for retooling.
Critically, the 2019 Budget lays the foundation for the resuscitation of the local industry including steel behemoth, Zisco, and the Cold Storage Company, largely through the much-needed fiscal incentives and policy prescription.
Zisco had been targeted for revival by a Chinese firm, R & F Properties.
However, the deal is understood to have all but collapsed and a new one is believed to have been agreed on between the investor and Government.
Finer details are expected in the near future. Prof Ncube proposed an allocation of $47,6 million for the 2019 financial year to the Ministry of Industry and Commerce so as to revive local industry.
S M E s also key
In addition to macro-economic consolidation, the TSP gives emphasis to investment and support for the SMEs sector. The sector absorbs a growing number of citizens as entrepreneurs and workers. At the moment, it is thought that about five million people are operating in the SMEs sector.
Government is keen to invest in infrastructure for use by SMEs to capacitate them and cause them to expand their operations. The 2019 Budget seeks to contribute towards the establishment of Venture Funds, targeting the “game-changing SMEs sector”.
The Venture Funds will augment the role of the EmpowerBank and Women’s Bank. EmpowerBank was set up by Government to ensure young people, who claim to have been marginalised by mainstream banks, get funding to support their business ventures.
The Women’s Bank also caters for the interests of women entrepreneurs.
Prof Ncube says inclusive growth presupposes support towards establishment of companies and viable income generating projects, not only in cities and towns, in districts and growth points.
