The Zambia Association of Manufacturers wishes to commend the Government of the Republic of Zambia for the gallant effort they are making to address the negative economic impacts of COVID-19 on the Zambian economy. Notably, the economy is expected to contract from an initial target of 3.6% to negative 2.6% by the end of 2020 as a direct effect of the Pandemic.
As an Association the projected negative growth is indeed alarming and would in a business as usual environment raise significant concern for the sector owing to the expected severe drop in revenue estimated at K14.8billion or 19.7% of the approved 2020 budget, and the subsequent concerns around the potential introduction of arbitrary tax policy changes introduced in an effort to cover this deficit. However, this is not a business as usual environment.
It is therefore comforting to note the Government’s intention to waive tax and interest penalties in an effort to minimize financial constraints being faced by companies during this period when a significant number of firms are faced with the real challenge of significantly reduced revenues and the real threat of closure due to the high cost of maintaining operations in a subdued economic environment. It is our expectation that the productive sector, and in particular manufacturing firms that have been affected by high tax and interest penalties shall be granted the waiver, which will give them a lifeline to continue operations in these difficult times. It is pertinent that additional measures be introduced to enhance the liquidity of the private sector and give them an opportunity to survive in the current environment.
The economic contraction brought by COVID-19 is expected to result in excess/idle capacities in Africa and other countries, this means Zambia is likely to be flooded by cheap imported goods which will threaten the existence of local manufacturers. In this regard, the government should consider applying appropriate trade remedies for goods where it is clearly established that local
manufacturers have got adequate capacity to meet the country’s requirements and have the appropriate quality specifications. These remedies can and should be effectively applied on imports of selected goods from the SADC and COMESA regions, as well as other regions Zambia trades.
These are unprecedented and extraordinary times that call for Zambia to utilize all possible measures to protect the lives and livelihoods of its citizens. Such interventions are required to mitigate the adverse economic impacts of COVID-19 and can be lifted when the economic situation normalizes as expected in the next 1 or 2 years. We will continue to engage with the Ministry of Commerce, Trade and Industry to actualize the necessary protection for Zambian manufacturers.
In line with the above, the Zambia Association of Manufacturers welcomes the move by the Government to fully support the development of new and sustainable value chains through enhanced collaboration between Zambian firms and regional and international counterparts.
In this regard, we take this opportunity to commend Mrs. Roseta Chabala – Immediate Past President (ZAM) on her appointed as Team Leader of the Taskforce established to achieve the aforementioned. It is our expectation that the deliberations between various stakeholders will increase the use and sale of Zambian products firstly – in retail stores and franchises – and pave the way for the journey of developing strong Zambian brands and businesses that can compete in domestic and international markets. Through evidence-based actions, it is our anticipation that the Taskforce will create sustainable business relationships that will see Zambian businesses growing from strength to strength through increased collaboration, mutual understanding and the attainment of measurable targets within specific timeframes.
As Zambia Association of Manufacturers, we envisage an increase in the production and sale of agro-processed and manufactured products in the country through the substitution of as many imported products as possible with locally produced goods and value-added products. This intervention is critical to the survival of the Zambian manufacturing and agricultural sectors.
We are therefore determined to ensure that this intervention fully anchors the Proudly Zambian Campaign and that in the immediate to medium term we will see more vetted and approved firms (both manufacturers and service providers) begin to receive specific incentives tailored to aiding approved “Proudly Zambian” firms. It is only when we buy local and utilize local products and services, that we activate the full potential of Zambians to build the Zambian economy.
Buying local will effectively contribute to the stabilization of the Zambian kwacha and turn around the fortunes of the country, thereby securing coveted positive economic growth in 2020. Key to this is the reduction of the import bill and the capacitation of local firms to generate more revenue domestically. This is critical to creating employment in the midst of uncertainty and securing the livelihoods of the Zambian citizenry. We urge all firms to engage the ZAM Secretariat to gain access to the Proudly Zambian logo for easy identification, and to partner with the Association to secure targeted growth-oriented incentives.
In the medium to long-term we remain resolute in our endeavor to ensure that the Proudly Zambian ethos of “think local first” and buying Zambian be applied across all key economic sectors including but not limited to; Mining, Tourism, and Construction. Further, we will continue to lobby and advocate for the extension of this approach to government procurement and will apply lessons learned from the initial exercise for maximum impact and success in ensuing target sectors.
In closing we continue to urge the Government to further curtail any unnecessary expenditure and pursue the various relief options currently being offered by cooperating partners and multilateral institutions. It remains our firm belief that the emergency support facilities being provided will cushion the economic blow of COVID-19 and fast track our road to economic recovery.
Thank you and God bless.