Dumisani Nsingo, Senior Business Reporter
THE Government’s intended support measure intervention has had an adverse impact on the country’s textile and clothing sector, an official said.
Zimbabwe Clothing Manufacturers’ Association chairperson Mr Jeremy Youmans said the textile sector is constrained in its efforts to offer a wide range of 100 percent cotton fabrics largely due to the effects of Statutory Instrument (SI) 163 of 2017.
“The local textile sector is severely constrained at the moment and is only able to supply a small range of 100 percent cotton fabrics. Therefore, support measures need to be directed at what textile products can be produced locally and also enable clothing products to be produced competitively. There is a lot of misinformation about these support measures and unfortunately, the Government imposed SI 163 of 2017 based on a lot of this misinformation,” said Mr Youmans.
SI 163 of 2017 increased the duties on all imported cotton fabrics from 10 percent to 30 plus $2,50 per kilogramme (kg) with effect from January this year and since it was tariff code-based it increased duties on fabrics that are not even made in Zimbabwe.
“Based on an average weight fabric, the $2,50 per kg equates to about 60 percent, meaning that the total duty payable is around 90 percent. This renders the local production of cotton garments from those fabrics which are not made locally, as totally uncompetitive, as imported cotton finished garments from SADC (Southern Africa Development Community) and Comesa (Common Market for Eastern and Southern Africa) come in duty free,” said Mr Youmans.
He said there was a need for Government to expeditiously repeal SI 163 of 2017 as it was negatively impacting on the textile and clothing sector.
“What is needed now is for speedy implementation from the Government as significant damage has been done by SI 163 and the maximisation of value addition must be progressed as soon as possible.
“Government needs to work with the industries on this and only implement interventions which are derived from a full consultation and informed position,” said Mr Youmans.
He said local textile mills were faced with a myriad of challenges culminating in failure to meet demands by clothing manufacturers.
“Currently, the local textile mills are unable to meet the demand of the orders from the clothing manufacturers, even on the range of fabrics that are made. The two industries are working together on this lack of capacity but a lot of it is to do with lack of financial resources and need for investment rather than a price competitiveness, and therefore duty impositions, such as SI 163 do not solve the problem, they actually make them worse,” said Mr Youmans.
In 2013 Government introduced the Clothing Manufacturers Rebate (CMR) system, which deliberately excluded all cotton fabrics in an effort to support local production of cotton fabrics.
Mr Youmans said the introduction of CMR played a significant part in ensuring the competitiveness of locally produced non cotton fabric with imports of finished garments from Sadc and Comesa. He however, lamented that CMR system was punitive to a number of local manufacturers.
“One of the main problems with the CMR is that Zimra (Zimbabwe Revenue Authority) imposed criteria which were penal to many manufacturers to enable them to join the system, particularly the SME (Small to Medium Enterprises)’s. These include a security bond to be in place and the requirement to have a separate warehouse. In addition, some were denied access to the CMR as they did not have tax clearances from Zimra,” said Mr Youmans.
He said players in the textile and clothing industry were making concerted efforts to come up with a number of interventions aimed benefiting the entire cotton to clothing chain.
“The textile and clothing sectors have been working very closely together to derive a set of interventions to best support local manufacturing in both sectors, in fact to benefit the entire cotton to clothing chain, which both sectors are fully committed to,” said Mr Youmans.
He said players in the textile and clothing industry signed an agreement last month aimed at improving the value addition in the two sectors.
“The agreement applies a sensible rate of duty and fully supports local production of textile products without the constraints of trying to work within tariff codes. The agreement enhances the CMR, and the Textile Manufacturers Rebate, the rebate system the textile industry enjoys, and is based more on import licensing and improvement in the identification of fabrics at the port of importation,” said Mr Youmans.
Industry and Commerce Minister Dr Mike Bimha said players in the textile and clothing industry have not approached the ministry with their concerns.
“We can only address an issue when the players engage us, so they should come to our offices. Our offices are open and we are very free to entertain any industrialists who come to us. If there are issues, we are there to look at them together and see what we can do because our role as a ministry is to support local industrialists,” he said.