News / National
Zimbabwe unveils industrial growth blueprint for automotive sector
30 Oct 2024 at 07:52hrs | Views
The Zimbabwe Industrial Reconstruction and Growth Plan (ZIRGP), a targeted economic manufacturing initiative, has outlined key strategies to boost domestic production of buses and trucks. Running from October 2024 to December 2025, ZIRGP aims to revitalise the local automotive industry by introducing policy interventions that incentivise local assembly and manufacturing, while reducing reliance on imported finished vehicles.
The plan proposes repealing Statutory Instrument 138 of 2022 and reinstating a 40 percent import duty on Completely Built-up Units (CBUs) to curb excessive imports. To encourage local assembly, ZIRGP will offer a 10 percent duty waiver on imported Semi Knocked Down (SKD) kits, essential components used for vehicle assembly. Additional measures include mandatory local procurement of assembled vehicles and the establishment of offtake agreements to secure domestic market demand.
A major aspect of the ZIRGP is its focus on attracting private investment in tyre manufacturing, offering incentives designed to maximise returns and create a sustainable local supply chain. Currently, the tyre industry, primarily consisting of retreaders, importers, distributors, and retailers, operates below capacity, necessitating annual imports worth approximately US$52 million. The plan aims to reduce these imports by bolstering local production, ultimately reducing costs and supporting the manufacturing sector.
Projections for the ZIRGP indicate it could lead to the assembly of 100 buses and 80 trucks per year, saving the country an estimated US$12 million while creating over 300 jobs throughout the automotive value chain. In addition, by mid-2025, Dinson, a key partner, is expected to begin manufacturing chassis and frames for trucks and buses, marking a significant milestone for Zimbabwe's industrial capabilities.
Historically, Zimbabwe's automotive industry has played a crucial role in meeting national vehicle demand. The Motor Industry and Development Policy (MIDP), launched in 2018, set a goal to attract 10 percent of total foreign direct investment (FDI) into the automotive sector by 2030, aiming for full capacity utilisation and higher employment. However, the MIDP's progress has been slower than anticipated, with vehicle assemblers like Quest Motors, Willowvale Motor Industries, and Deven Engineering facing significant challenges due to limited government support for local procurement policies.
In 2014, the Government mandated local procurement of buses and trucks; however, many State-owned entities have continued to import, leaving local manufacturers underutilised. Analysts argue that a more robust policy framework that effectively promotes local assembly and supports recapitalisation initiatives, such as the Zimbabwe United Passenger Company (ZUPCO) under the Mutapa Investment Fund, could prove transformative for the industry.
Carlos Tadya, an economist based in Harare, emphasised that "a well-crafted policy framework that incentivises local assembly and procurement could revitalise Zimbabwe's automotive industry." However, he noted that successful implementation would require addressing longstanding challenges like affordable financing, reliable energy, and workforce training. Past policies have often faltered due to inconsistency and poor enforcement, he cautioned.
As a short-term plan, the ZIRGP aligns with the country's broader National Development Strategy 2 (2026-2030) and supports the Zimbabwe National Industrial Development Policy 2, working towards the Vision 2030 goal of transforming Zimbabwe into an upper-middle-income economy. By addressing immediate needs in the manufacturing sector, ZIRGP aims to lay a foundation for long-term industrial growth, positioning Zimbabwe as a competitive player in regional automotive production and broader industrial development.
The plan proposes repealing Statutory Instrument 138 of 2022 and reinstating a 40 percent import duty on Completely Built-up Units (CBUs) to curb excessive imports. To encourage local assembly, ZIRGP will offer a 10 percent duty waiver on imported Semi Knocked Down (SKD) kits, essential components used for vehicle assembly. Additional measures include mandatory local procurement of assembled vehicles and the establishment of offtake agreements to secure domestic market demand.
A major aspect of the ZIRGP is its focus on attracting private investment in tyre manufacturing, offering incentives designed to maximise returns and create a sustainable local supply chain. Currently, the tyre industry, primarily consisting of retreaders, importers, distributors, and retailers, operates below capacity, necessitating annual imports worth approximately US$52 million. The plan aims to reduce these imports by bolstering local production, ultimately reducing costs and supporting the manufacturing sector.
Projections for the ZIRGP indicate it could lead to the assembly of 100 buses and 80 trucks per year, saving the country an estimated US$12 million while creating over 300 jobs throughout the automotive value chain. In addition, by mid-2025, Dinson, a key partner, is expected to begin manufacturing chassis and frames for trucks and buses, marking a significant milestone for Zimbabwe's industrial capabilities.
Historically, Zimbabwe's automotive industry has played a crucial role in meeting national vehicle demand. The Motor Industry and Development Policy (MIDP), launched in 2018, set a goal to attract 10 percent of total foreign direct investment (FDI) into the automotive sector by 2030, aiming for full capacity utilisation and higher employment. However, the MIDP's progress has been slower than anticipated, with vehicle assemblers like Quest Motors, Willowvale Motor Industries, and Deven Engineering facing significant challenges due to limited government support for local procurement policies.
In 2014, the Government mandated local procurement of buses and trucks; however, many State-owned entities have continued to import, leaving local manufacturers underutilised. Analysts argue that a more robust policy framework that effectively promotes local assembly and supports recapitalisation initiatives, such as the Zimbabwe United Passenger Company (ZUPCO) under the Mutapa Investment Fund, could prove transformative for the industry.
Carlos Tadya, an economist based in Harare, emphasised that "a well-crafted policy framework that incentivises local assembly and procurement could revitalise Zimbabwe's automotive industry." However, he noted that successful implementation would require addressing longstanding challenges like affordable financing, reliable energy, and workforce training. Past policies have often faltered due to inconsistency and poor enforcement, he cautioned.
As a short-term plan, the ZIRGP aligns with the country's broader National Development Strategy 2 (2026-2030) and supports the Zimbabwe National Industrial Development Policy 2, working towards the Vision 2030 goal of transforming Zimbabwe into an upper-middle-income economy. By addressing immediate needs in the manufacturing sector, ZIRGP aims to lay a foundation for long-term industrial growth, positioning Zimbabwe as a competitive player in regional automotive production and broader industrial development.
Source - The Herald
