Golden Sibanda Senior Business Reporter
GOVERNMENT has ordered all line ministries, public institutions and parastatals to buy at least 80 percent of their vehicles from local car assemblers with immediate effect, a development economists and captains of industry welcomed as positive and a boon for Zim-Asset.
Secretary for Transport and Infrastructural Development Mr Munesushe Munodawafa, in a letter dispatched to ministries, parastatals and State-linked firms’ heads on March 27, said the directive sought to support the local vehicle industry.
Local assemblers are on the brink of collapse due to low volumes, while hundreds of millions of dollars are wired to foreign car firms annually.
“Please refer to Cabinet Circular number 16 of 2011 date October 2011, issued by the Office of the President and Cabinet,” Mr Munodawafa said in the statement.
“Any deviation from this norm needs to get authority from Government.”
Mr Munodawafa said the requirement to support the local vehicle industry was in line with Zim-Asset.
The directive on vehicle procurement was sent out to a total of 23 ministries and two public institutions, but applies to all arms of Government.
“In view of the foregoing, and in order to aid proper planning at national level, you are requested to provide indicative figures of annual vehicles for your ministry and State Enterprises and Parastatals under your ministry for the next five years as far as vehicles are concerned.”
Government Ministries, departments, State enterprises and parastatals and even the legislature had continued to have their vehicles, especially trendy cars, procured from outside Zimbabwe against a long standing Cabinet order.
The argument was that employment contracts of individuals for whom the vehicles were being procured, specified the type of cars they should receive.
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But Willovale Mazda Motor Industries argued, it had capacity to produce the vehicles with specifications stipulated on the said contracts of employment.
Importing vehicles has left local assemblers — seriously constrained by low volumes and weak demand due to the influx of used cars from Japan, Singapore and the United Kingdom — teetering on the brink of collapse owing to viability constraints, resulting in job losses.
WMMI, one of the local vehicle assemblers most affected by the situation, has registered a huge decline in activity and was at one point forced to completely shut down its assembling plant.
WMMI managing director Engineer Dawson Mareya yesterday said now that Government had decided to enforce the 2011 Cabinet directive, this would help the local vehicle assemblers to get back to their feet.
“If that directive is (now) there, it is welcome news as we have been waiting for it to get the sector going. There (currently) is little activity going on because we did not have supportive measures in place,” Eng Mareya said.
Eng Mareya has on several occasions lamented a situation where arms of Government and related institutions wantonly disregarded the Cabinet order, a development that affected the viability of WMMI and other assemblers in a big way.
This contrasted with practices in other countries such as South Africa, which provides incentives for manufacturers by way of an export rebate on vehicle exports under the country’s national vehicle industry development plan.
According to Buy Zimbabwe, a campaign movement for increased consumption of local products, there was need to incentivise the exporters.
In 2013, Motor Industry Association of Zimbabwe President Mr Ben Kumalo, said the entire motor industry had exported 760 cars against 52 000 imports.
In the recent past, Eng Mareya has urged the Ministry of Finance and Economic Development and Zimbabwe Revenue Authority to hike vehicle import duty in an effort to rescue what is left of local assembling.
Quest Motors Manufacturing (Quest), another local vehicles assembler based in Mutare (Manicaland), once urged Zimbabwe to ban car imports.
The group, with capacity to produce 105 cars per day and 100 buses monthly, said Government should shift its policy towards promoting the local car industry.
This comes as approximately 80 percent of cars on Zimbabwe’s roads are imported.
“It’s not like there is no capacity, there is no Government support,” Quest’s managing director Mr Tarik Adam, said at the launch of the company’s new car model Foton Tunland at its Mutare plant in July last year.
He said Quest found it difficult to continue manufacturing cars under the current circumstances, adding that with Government support, the company was “in a position to supply the country with affordable brand new cars”. At full production capacity, Quest employs at least 3 000 workers.
Economist Dr Stanley Mahlahla, said the policy was noble as it would go a long way in supporting the local car industry.
“Government is the biggest spender in the economy and if it buys vehicles from the local assemblers, that will certainly boost capacity of the local car industry and this will also go a long way in creating jobs.”
Confederation of Zimbabwe Industries president Mr Charles Msipa, welcomed the development.
“It is a very positive development to have taxpayers’ money supporting local companies and employment,” he said.
“We hear that some of these companies were on the verge of collapse and the policy would certainly induce life into these companies.”
Former Zimbabwe National Chamber of Commerce president Mr Oswell Binha, applauded the directive by Government, saying this was critical to support strategic industries since Government was the biggest cash mover.
“This is very important to reviving the industry because, look, the entire value chain industry was dead; from upholstery, glass to rubber. As biggest spender in the economy, Government must lead by example, but I also encourage the vehicle assembly industry to go for variety, everybody can’t drive same type of car,” he said.
Mr Binha said while local procurement by Government and related public institutions would boost volumes for manufacturers, the assemblers needed to come up with flexible and affordable payment terms.
Figures from Zimbabwe Statistical Agency show that Zimbabweans imported vehicles worth $469 million last year.
Government ministries, departments, agencies and state-linked firms have also been importing utility vehicles among them Isuzu, Ford Ranger and Toyota trucks.