Tax incentives slash capital costs for domestic industry

Business Reporter

Zimbabwe’s investment fiscal incentives, particularly within Special Economic Zones (SEZs), are proving effective, with industrial leaders endorsing the Government measures for significantly lowering the funding required to acquire essential machinery and equipment.

Under the SEZ framework, investors benefit from a 100 percent customs duty rebate on imported capital equipment and raw materials, a zero-rated corporate income tax holiday for the first five years, 50 percent Special Initial Allowances, flat tax rates for technical staff, among others.

Speaking during the 19th COMESA Business Forum and Exhibition at the Harare International Conference Centre (HICC) last week, Davipel Holdings chief executive, Mr Davison Norupiri, highlighted how targeted fiscal incentives have boosted industrial investment.

Mr Norupiri was contributing to a session titled “From Commodities to Competitiveness – Securing Regional Value Chains for the Future,” which examined strategies to transition the region from a primary raw material exporter into a competitive industrial base.

“The lesson on that is actually very simple; Let’s incentivise the machine, let’s not incentivise the profit,” Mr Norupiri told delegates.

“The moment we do that, we are actually advocating and encouraging employment creation.”

The business forum, the second build-up event ahead of the 25th COMESA Summit, brought together policymakers, business leaders, investors, development finance institutions, entrepreneurs and regional trade associations for high-level dialogue, business connections and engagement.

Mr Norupiri explained that the Government’s removal of duty on machinery significantly lowered entry barriers for capital-intensive industries, noting that Davipel Holdings’ US$12 million investment in its state-of-the-art corporate headquarters and high-capacity agro-processing complex in Sunway City would have faced prohibitive equipment costs without SEZ incentives.

“Capex would have been 40 percent more expensive in terms of what we bought in machinery, but it had that reduction because of this incentive, which is the result of duty-free,” he said, adding that incentives directly targeting machinery drive long-term industrial growth.

Beyond fiscal measures, the SEZ framework delivers critical non-fiscal advantages by streamlining regulatory approvals and business operations through the Zimbabwe Investment and Development Agency (ZIDA).

Operating as a centralised one-stop shop, ZIDA consolidates licensing, permits, and inter-ministerial clearances into a unified approval process, eliminating bureaucratic delays for both local and foreign investors.

Coupled with potential municipal rate waivers and specialised land allocations, the structural efficiencies allow businesses within designated zones to fast-track project implementation, enhance local value addition, and accelerate large-scale employment creation.

Applauding the introduction of ZIDA, Mr Norupiri described the initiative as a major breakthrough.

“You do not need to go to several ministries and spend several days,” he said.

“You only need to go to ZIDA, which is our one-stop shop. ZIDA is very supportive and it has got the power to do so because of the strength which it has been given by the Government.”

Speaking at the same event, Mr Charles Sarkis, international value chain development expert at the United Nations Industrial Development Organisation (UNIDO), presented insights from the EU-funded Africa Trade Competitiveness Programme under the Global Gateway initiative.

Addressing the core elements required to move Africa towards a unified market under the African Continental Free Trade Area (AfCFTA), Mr Sarkis emphasised that regional integration must focus on value addition rather than exporting raw materials.

“We should be looking at a value chain from three dimensions: competitive advantage in value addition, sustainable job creation at scale, and the potential for export growth and import substitution,” Mr Sarkis said.

He highlighted horticulture and coffee as two priority value chains capable of driving transformative change within the COMESA region.

Pointing to current structural imbalances, he noted that COMESA member states currently export nearly 90 percent of their coffee beans in raw, dried form, allowing overseas processors in Europe and North America to capture the bulk of the economic value.

In line with the Inter-African Coffee Organisation’s target to increase local value addition from under 10 percent to 50 percent by 2030, he urged regional economies to retain manufacturing margins and job opportunities locally.

Mr Sarkis also redefined what constitutes a true regional value chain, noting that it requires cross-border interdependence rather than isolated national efforts.

“A regional value chain doesn’t mean 21 states doing the same thing behind their borders. It means countries depending on each other,” he explained, citing how coffee grown in East Africa could be roasted in regional hubs and packaged using specialised technology from Tunisia’s Centre of Excellence for Packaging.

Addressing the regulatory environment required for cross-border expansion, Mr Boniface Makongo, director at COMESA Competition and Consumer Commission, outlined the role of regional competition policy in preventing market distortions, cartels and dominant abuses that hinder new entrants.

Highlighting the commission’s efforts to support fast-moving commercial transactions, Mr Makongo revealed that the regulator has handled merger transactions representing over US$332 billion since operating in 2013.

To support business expediency across the common market, the commission introduced an expedited merger review process that reduces turnaround times to 45 days, well below the statutory 150-day allowance.

“Our role is essentially to ensure that markets work,” Mr Makongo said.

“Free and liberalised trade will not be achieved if dominant positions are abused or if anti-competitive practices create barriers to entry.”

Source: Tax incentives slash capital costs for domestic industry – herald

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