The Industrial Development Policy (IDP) and the National Trade Policy (NTP) (2012-2016) will be unveiled at the Harare International Conference Centre where senior government officials, business associations and heads of parastatals, among others, are expected to attend.
The two policies are expected to provide solutions on how the manufacturing sector can be improved to yesteryear levels. At its peak, the sector used to contribute 23% to the Gross Domestic Product (GDP). Its contribution has almost halved to 12%.
The IDP wants to restore the manufacturing sector’s contribution to GDP from the current 12% to 20% and its contribution to exports from 26% to 50% by 2016.It also wants to ensure current industrial capacity utilisation increase from levels of around 43% to over 90% by the end of the planning period. It advocates the re-equipment and replacement of obsolete machinery in order to improve production efficiencies and product quality, making industry more competitive locally and in the region.
The IDP strategies include the establishment of an Industrial Development Bank primarily dedicated to financing short and long term recapitalisation of industry. Industry requires long term financing to replace obsolete equipment. However that funding is not available as local banks are providing short term loans due to the short term nature of deposits.
As a short-term measure, government will initiate revival packages for distressed companies with a clear-cut exit policy on the basis of a revolving fund. The trade policy is a key strategic component of the IDP to support the trading environment to maximize attractiveness of Zimbabwean products in the region and globally.
The NTP wants to leverage on the IDP by restoring manufacturing sector’s contribution to export earnings from the current 16% to 50% by 2016.It aims to stimulate and encourage value-addition of primary goods/raw materials with the ultimate target of increasing export earnings by all sectors to surpass the country’s peak of US$2, 6 billion in 1997 (US$2,5 billion in 2010) to US$6 billion in 2015, translating to an annual growth rate of 20%.
The NTP will formulate a clear National Strategy for Export Development and Promotion for the country in order to enhance access and competitiveness of Zimbabwe’s exports in regional and international markets. It will give guidance on tariff policy, non-tariff measures and trade defence mechanisms with the aim of promoting trade and protecting local industry from international competition subject to international obligations.
According to estimates done by the Confederation of Zimbabwe Industries, the manufacturing industry requires US$2 billion for recapitalisation. Since the inception of the inclusive government in 2009, government has come up with facilities to bail out companies.
The US$70 million Zimbabwe Economic and Trade Revival Facility is one such fund where government teamed up with the Africa Export and Import Bank to give cheap funds to companies.
Last year, government also launched a US$40 million fund to resuscitate companies in Bulawayo.