BY VENERANDA LANGA
PARLIAMENT has urged government to deal with key factors that are hindering industrialisation in the country in its forthcoming 2020 budget expected to be announced on November 14.
The Felix Mhona-led Budget and Finance Parliamentary Portfolio Committee told delegates at the 2020 pre-budget seminar in Victoria Falls that the deteriorating energy situation in the country and acute shortage of foreign currency were seriously affecting industry.
The factors to be tackled include erratic electricity and water supplies so that the country is at par with other African countries in the Accelerated Industrial growth for Africa.
“Erratic key enablers of industry such as water, electricity and good transport networks is affecting industrial growth and heavy reliance on generators for power back up is unsustainable,” the Budget and Finance Portfolio Committee report read.
“The acute shortages of foreign currency, unstable macro-economic environment epitomised by rising inflation, legacy debts for companies, and negative growth and influx of consumables, constituting 82% of import expenditure, are affecting business.”
Mhona said at recent public hearings by the committee, participants noted that lack of proper manufacturing infrastructure could affect the industrialisation programme.
“The public noted with concern the lack of proper infrastructure and control systems at most ports of entry, resulting in rampant smuggling which is hurting the local industry. The business community raised concern that they are subjected to double taxation through corporate tax and the 2% (intermediated electronic) transaction tax. Members of the public also vehemently opposed the 2% tax and called for its scrapping,” the committee said.
Recently when different captains of industry appeared before the Budget and Finance Portfolio Committee to speak on their 2020 budget proposals, they bemoaned the need for clarity on deficit financing in the country.
“They said there is need for adequate funding of the Zimbabwe Revenue Authority so that it plugs loopholes to improve border systems efficiency as well as modernisation of infrastructure at the country’s ports as the country prepares for industrialisation,” Mhona said.
On tax incentives, the committee said companies that invest in new plant and equipment and demonstrate the number of new jobs that are likely to be created from the new investment should be awarded significant tax incentives.
“The 2020 Finance Act should provide for rationalisation of duty regimes for imported raw materials and finished products by removing inconsistencies like on fluorescent bulbs where no duty is charged on finished products yet there is duty on components for the local manufacture of the same products,” the committee said.
To ensure that mining was also in line with the industrialisation agenda, the committee said there was need to review the numerous taxes charged to mining companies so that they are in line with best practices.
“The Zimbabwe Electricity Supply Authority must respect the contracts it has with miners, where they pay for electricity in foreign currency and yet they do not get the power. It must respect the uninterrupted power agreements,” the committee said.