22 January 2013

Zambia: Manufacturing Sector's GDP Input Drops

THE local manufacturing sector's contribution to the country's Gross Domestic Product (GDP) in the last five years has dropped despite the industry recording an average growth of three per cent.

According to the Zambia Association of Manufacturers (ZAM), the sector's contribution in the past five years from 2008 to 2012 decreased from 11.5 per cent to 10.7 per cent.

This is owing to a number of factors such as lack of incentives in the sector and stiff competition from counterfeit products which have flooded the market.

ZAM chief executive officer Roseta Mwape said another factor which had led to contributions falling below 10 per cent was partly due to the global economic recession in 2008.

She regretted that over the years, the sector had continued to utilise only a quarter of its capacity and potential.

"The fact that the sector is still utilising only a quarter of its capacity means that there are opportunities for more investments in most sub-sectors.

"Since 2005, the manufacturing sector has seen substantial investments in various sectors such as steel and metal fabrication, agro processing and a few hi-tech industries," she said.

The highest contributors to the GDP continue to be the food, tobacco and beverages sub-sectors at 36.9 per cent, and base metals and fabricated engineering products sector contributing about 24.95 per cent.

Others are textiles, garments and leather products at 14 per cent, chemicals, plastic, synthetic rubber with chemical products at 10.7, and wood and wood products at seven per cent.

She attributed the increase in investments to a conducive economic environment and political stability.

Ms Mwape said the sector had also seen pragmatic and commendable political will towards diversification and value addition.

She, however, said Zambia should quickly sort out infrastructural inadequacies which, if rectified, would make the country the best destination for long-term investments.

Commenting on the sector's taxation framework, Ms Mwape said it was the association's hope that in the near future, manufacturing would receive special attention with regard to taxation.

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