Motor industry to create 20,000 jobs

Published: 24 June 2018

Government says the recently launched Zimbabwe Motor Industry Development Policy (ZMIDP) will result in the creation of 20 000 jobs in the sector and downstream industries, driven by a rise in capacity utilisation.

ZMIDP was launched a fortnight ago and once fully implemented, it is expected to see the sector ramping up capacity from the current levels of under 10 percent to full capacity by 2030.

The policy is anchored on six key strategies, which are control on second-hand vehicle imports, categorisation and regulation of the motor industry, development of motor industry value chain and clusters, assembly of semi-knocked down (SKD) and completely knocked down (CKD) kits, and Government support.

ZMIDP runs from this year to 2030, with a provision for a mid-term review after the first five years.

President Mnangagwa intends to transform Zimbabwe into a middle income country by 2030.

Government will support local car assemblers through legislation and increasing duty and surtax on imported second-hand cars as part of measures to control their importation and pull the local motor industry out of the doldrums.

This will see many people buying locally and saving the country billions in foreign currency.

Between 2009 and 2014, vehicle imports - mainly for second-hand cars - chewed an average of US$500 million per annum.

Imports, together with other economic challenges, conspired to cause a decline in capacity utilisation at local vehicle assemblers from 20 000 units in 1997 to almost 6 000 in 2009.

Meanwhile, sales for second-hand vehicles have increased to over 60 000 units.

The Minister of Industry, Commerce and Enterprise Development Dr Mike Bimha said ZMIDP also seeks to promote downstream local industries such as suppliers of tyres, batteries, glass, paint, chemicals, solvents, springs, steel, seat forms, seat covers and wood.

In the past, vehicle batteries used to be manufactured by Battery World, Art Corporation and Trimtex Engineering, all of which have since closed.

Only Chloride Zimbabwe is making batteries and has invested in advanced technologies for the production of maintenance free batteries.

The battery sub-sector is currently failing to meet demand as it is producing 18 000 batteries per month, against a local monthly demand of 25 000. The increase in the use of solar as an alternative energy source has also triggered more demand for batteries.

Dr Bimha said the success of ZMIDP will be measured against the development of the local motor industry to a level where it is 100 percent self-sufficient in terms of supplying automotive and components requirements by 2030 and creation of 20 000 jobs.

Job creation is at the heart of Zanu-PF 's manifesto, whose theme for the July 30 plebiscite reads "Unite, fight corruption, develop, re-engage and create jobs".

Local assemblers must reduce prices

There are concerns that locally assembled vehicles are beyond the reach of many, with only well-heeled individuals affording the cars.

Dr Bimha told The Sunday Mail Business on the sidelines of the ZMIDP launch that vehicle prices are now expected to decline since incentives would be provided.

"Well, what we produce here must meets the standards in terms of quality and be affordable.

"If those cars are expensive, we want to interrogate why they are expensive so that we look at those issues and make them affordable because any price is determined by so many factors.

"As Government, our view is that cars should be affordable and if not we are interested to know why it is not like that," said Dr Bimha.

Currently, most people are of the opinion that BAIC vehicles assembled in Harare are beyond the reach of many, almost twice the price in China.

Dr Bimha said he would check the prices at BAIC and establish why they are on the higher side since the company had assured Government that the cars would be cheaper than those being imported.

Under ZMIDP, local assemblers are expected to introduce affordable entry level models to cater for low income earners.

Govt support central to ZMIDP success

Dr Bimha said for ZMIDP to succeed, Government support is required.

Government plans to support the local motor industry through direct buying of new locally assembled vehicles, offering investment finance at affordable rates, export incentives and customer hire purchase finance to stimulate demand.

Dr Bimha said: "A gradual approach will be adopted to reduce second-hand vehicle imports into the country through the use of duty combined with surtax."

The surtax rate is yet to be set since there is no Statutory Instrument in place.

The ministries of Industry and Finance will work together with the Attorney General's Office to ensure the SI is prepared and gazetted at least by December this year.

Government also intends to regulate the importation of second-hand vehicles through pre-shipment inspection, which would be undertaken at source by an international firm in tandem with set local and global standards.

A Pre-shipment Inspection Policy is expected to be ready by next year in December.

Vehicles with defects will be banned.

A proposal has also been made to ensure that vehicles over eight years from year of manufacture are prevented from landing in the country.

On its part, Government plans to start procuring locally by December this year, in sync with Cabinet circular 16 of 2011.

Second-hand car dealers fret

The second-hand vehicle sector has been growing exponentially since 2009 as citizens avoided vehicles from local assemblers, whose prices are prohibitive.

The move to control their importation has plunged second-hand car dealers in a quandary.

For a Harare-based second-hand cars dealer, Mr Ngonidzashe Fusire, this might mean loss of business for the sector. Mr Fusire argued that most Zimbabweans cannot afford to buy locally assembled vehicles.

"This is why many have been buying second-hand cars. If there was to be a facility for higher purchase like in South Africa, then the ordinary person could afford a brand new car.

"But as it is, no one can buy those cars and increasing duty, which is already over 100 percent, will make our cars expensive, business will be affected," said Mr Fusire.

The South African experience

South Africa implemented the Motor Industry Development Policy from September 1995.

At inception, vehicle production was 200 000 but it has since grown to about 600 000 per year.

South Africa's MIDP ended in 2012 and was replaced by the Automotive Production Development Programme in 2013.

There are plans to double vehicle production to 1,2 million per year by 2020, representing a global market share of 1 percent. Plans to launch the ZMIDP started in 2002 but the process hit roadblock until 2015 when it resumed in earnest.
- zimpapers