NANCY MWAPE, Lusaka
THE Zambia Association of Manufacturers (ZAM) has bemoaned the high cost of doing business in the country, saying
this could lead to decline in productivity and plant expansions if left unchecked.
And Government has pledged to work with manufacturers to accelerate the industrialisation agenda and foster production of more value added products by both large- and small-scale manufacturers.
Speaking at the ZAM annual general meeting, association president Roseta Chabala said the manufacturing sector is faced with numerous challenges that pose negative impact on the industry.
Mrs Chabala said tax and non-tax policies have significant effect on the ability of the manufacturing sector to flourish.
“Last year, we grappled with a number of ad hoc policy pronouncements that affected the ability of firms to maintain good relations with their input suppliers and meet their contract obligations to provide certain goods,” she said.
She also said the 75 percent electricity increment is too high for the sector and will cripple the industry leading to a myriad of native implications such as higher levels of unemployment and lower forex earnings.
“ZAM is not averse to the tariff increment and takes cognisance of the need for the sector to attain more cost-reflective tariffs. However, we require gradual increments that will allow for an adjustment period to the increasing cost structure,” Mrs Chabala said.
Mrs Chabala also said the introduction of the five percent surcharge tax on goods manufactured in Zambia with the aim to promote value addition, has not worked as anticipated.
She said the tax has resulted in high costs for producers who import their, inputs for further processing, hence negatively affecting the sector.
At the same event, Finance Minister Felix Mutati said solutions to the challenges the manufacturing sector is facing, such as the high cost of doing business, can be solved through increased consultations and dialogue with key ministries.
In a speech read for him by Minister of Works and Supply Matthew Nkuwa, Mr Mutati said Government recognises the need to work with the private sector to create a more conducive business environment.
He also promised to work with the association to address the anomalies arising from the implementation of the five percent surcharge introduced last year.