Industry cautions Government on budget

Published: 20 December 2013

Industrialists have lauded proposals announced in the 2014 national budget aimed at stimulating production but emphasised the need for follow ups to ensure some of the measures do not backfire.

Finance Minister Patrick Chinamasa presented the budget on Thursday announcing a raft of measures targeted at enhancing declining productivity in an economy which is bordering on stagnation.

Among the instruments were a hike in taxes of certain categories of imports to protect local industry and scrapping of duty on raw materials to encourage local production.

But industrialists warned that the Government had to come up with programmes to finance revival of local production to ensure prices remained stable.

"The imposition of high taxes is going to result in prices of goods such as soap going up and this is going to hurt the consumers," said one industrialist at a post budget meeting the Confederation of Zimbabwe Industries (CZI) organised.

"I am not sure if we have addressed the root cause of the problem or we are just making life harder for the consumer."

Zimbabwe National Chamber of Commerce vice president Davison Norupiri said it was important that the problem of leaky borders be addressed.

"As long as our border are not capitalised to deal with smuggling, then the high tariffs will encourage smuggling."

Smuggling of goods will mean that they land in the country at lower prices to the disadvantage of Government, which will not be paid taxes as well as the local industry which has to compete with cheaper trafficked goods.

Zimtrade chief executive Sithembile Pilime said tariff imposition alone would not help the economy.

"We need to do something to ensure productivity improves by addressing the challenge of infrastructure and enablers," she said.

Local industries are not only battling absence of working capital but also have to contend with shortages of electricity and water.

"If you do not put duties you become a supermarket (for imports) but if you do, you increase the opportunities for smuggling."

- New Ziana