TRYNESS TEMBO, Lusaka
THE Zambia Development Agency (ZDA) has called for the establishment of an export adjustment scheme fund to address the challenges faced by the private sector and exporters of non-traditional exports (NTEs) in the country.
ZDA says the creation of a scheme will serve as a supplementary export subsidy and proceeds will be used to compensate exporters for high costs of production arising from the depreciation of the Kwacha against major convertibles currencies.
According to the ZDA exporter audit report 2016, there is need to recapitalise the Zambia Export Development Fund (ZEDEF), managed by the agency which is key to ensuring a number of exporters access adequate funds to finance export activities.
“When the Kwacha depreciates, imported raw materials become expensive hence high cost of production making Zambia’s NTEs uncompetitive,” the report reads.
The development agency notes that currently, ZEDEF loan portfolio is only US$3 million as residual fund from European Union funded export development programme (EDP) II is too small to make meaningful impact.
ZDA says the major challenge faced by exporters is lack of affordable finance to drive diversification of exports.
The report further notes that capital allowance of five percent on plant and machinery should be approved for manufacturing exporters who export about 50 percent of their annual turnover.
ZDA further urged Government to provide tax incentives to investors in the manufacturing of inputs which are mostly imported by exporters to mitigate against high cost of production.
It also encouraged Government to enhance investments in alternative sources of energy to improve provision of power supply to industry.