Duty Hike on Fabrics Will Spur Unemployment, Frustrate Productivity - ZNCC

The Zimbabwe National Chamber of Commerce (ZNCC) has made an urgent call for Finance Minister Mthuli Ncube to scrap the duty increase on fabrics as a strategy to spur growth in the clothing value chain. The call follows the increase of customs duty to 40% plus US$2.50 per kilogram on selected polyester staple fibers and dyed woven fabrics, together with their removal from the Clothing Manufacturers Rebate.

The ZNCC argues that the decision presents serious risks to the competitiveness and stability of the entire cotton-to-clothing value chain, given the current domestic textile capacity is very limited. "Only two mills are operating, producing a narrow range of fabrics at low and inconsistent volumes. They cannot meet the quantity, variety, or quality required by local clothing manufacturers," said the ZNCC.

The commerce lobby group contends that the proposed tariff structure targets raw and intermediate inputs rather than finished imports, which immediately raises production costs for garment manufacturers, reduces their competitiveness, triggers higher retail prices, weakens demand for local clothing, and potentially forces closures. The ZNCC warned that raising duties on fabric inputs will not strengthen the textile sector if garment manufacturers lose orders or shrink production.

The ZNCC proposes suspending the implementation of the proposed tariff increases until the ongoing capacity study is completed and validated. "Implementing them now risks locking the country into an inappropriate and harmful policy direction based on incomplete information," the ZNCC added