In this story:
- Govt offers guarantees to financiers
- Tax incentives introduced
- Increased focus on full exploitation of dams
By Maricho Reporter
Zimbabwe is extending government guarantees to support access to credit facilities as it steps up support towards projects aimed at enhancing growth of the irrigation sector, one of the key measures towards drought-proofing agriculture and guaranteeing food security, according to Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube.
About ZiG88.4 million has been budgeted under the irrigation sector in 2024 targeting mainly the following key areas: –
- Irrigation rehabilitation
- Development of irrigation infrastructure; and
- Maintenance of communal irrigation schemes.
Furthermore, in order to compliment irrigation development, government has continued to support construction of dams as well as conveyancing systems to feed water to irrigation schemes as government adopts a new concept dubbed: A dam is an economy – premised on the idea that water from the dam can be used to produce electricity, for tourism or for agricultural purposes.
Major dams such as Tokwe Mukorsi, Machekeranwa Marovanyati and Chivhu dams were recently commissioned and all will also provide water for irrigation purposes. Currently other major dams under construction such as Gwayi Shangaani, Kunzvi, Ziminya, Tuli Manyange, Vungu and Semwa are being funded by Treasury and are earmarked for expanding irrigation development once completed.
Here are some of the tax incentives that government has availed, according to Professor Ncube:
National Project Status
Government has granted National Project Status for construction of dams such as Vungu and Semwa to support irrigation programmes.
The National Project Status is granted in terms of Sections 140 and 141 of the Customs and Excise (General) Regulations, as read with Statutory Instrument 5 of 2021.
Under National Project Status, Dam Contractors have been relieved from paying customs duty and VAT on capital goods which comprises Civil & Engineering Structures, pumps and pipes. In addition, movable equipment which includes excavators, concrete mixers and dump trucks, among other goods, are imported duty free on a temporary basis.
Value Added Tax
All agricultural inputs, implements and produce are exempted from Value Added Tax in terms of Sections 10 and 11 of the Value Added Tax Act [23:12], as read with Statutory Instrument 15 of 2024.
Agricultural equipment exempted from VAT includes tractors, machinery for soil preparation, combine harvesters, centre pivots, sprinklers and pumps, among others.
VAT Deferment Facility
VAT deferment is granted on irrigation capital equipment imported for a period not exceeding 180 days, subject to the conditions set by the Commissioner-General of the Zimbabwe Revenue Authority in terms of Section 12A of the VAT Act [23:12]. Currently, the minimum threshold is US$500 000.
This facility provides cash flow relief to irrigation farmers, in view of the huge capital outlays required in the importation of capital equipment.
Tariff Amendment for Specified Goods
With a view to streamline administrative processes and ease the Cost of Doing Business, Rebate of Duty on Imported agricultural Capital Equipment was incorporated into the National Harmonized System of Tariff Nomenclature (Tariff Handbook), with a 0% customs duty on imported capital equipment.
In addition, solar equipment for powering irrigation infrastructure attracts 0% customs duty.
Centre Pivot Manufacturers Rebate
In order to reduce the cost of manufacturing centre pivots, Government introduced a Centre Pivot Manufacturers Rebate in 2019. The manufacturer’s rebate enables manufacturers of centre pivots to import duty-free, parts and components used in the manufacture of centre pivots.
Development Partner Support
Development partners are also complimenting government’s efforts in irrigation development offering facilities which include: –
- US$15 million facility IFAD, OFID and government co-financed Small Holder Irrigation Revitalisation Programme.
- US$35.7 million Loan Facility under the OFID for Smallholder Agriculture Cluster Project (SACP)
- US$20 million Kuwait Loan Fund; and
- US$9 million UNDP and FCDO Climate Adaptation Water, Energy Programme.
“These facilities continue to make a positive impact in various communities through enhancing food security at community level,” said Prof Ncube.
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