Bianca Mlilo Business Reporter
ABATTOIRS in Bulawayo have called for an urgent waiver of the fifth quarter levy as they are now failing to export due to the severe tax regime.
The abattoirs said thousands of raw hides were rotting at their warehouses.
In 2014, the government introduced a $0,75 per kilogramme levy tax on exports of raw hides in a move aimed at boosting value addition in the leather industry as well as curbing the exportation of raw hides by local abattoirs.
Hides on the international market are priced at $0,85/kg which means sellers would only realise $0,10 per hide.
Abattoir owners in the city said there was a need for the government to reverse the fifth quarter levy since the country was now losing huge sums from potential export earnings.
Bulawayo Abattoirs’ hides manager, Roger Tavares, told Business Chronicle yesterday that they have a large supply of hides which could bring in a lot of revenue if sold.
He said abattoirs in Matabeleland have a combined stock of hides in excess of 35,000 and between 10 and 20 percent of them were already rotting.
“We’ve since engaged the Ministry of Industry and Commerce, Ministry of Agriculture, Mechanisation and Irrigation Development and the Ministry of Finance and Economic Development for a waiver to help us get rid of the stock we’ve amassed to date. Relevant concerned bodies have visited us including the National Economic Conduct Inspector.
“The hides in stock are worth approximately $450,000 and there are no local buyers for hides. There’s a levy on exports which is why there’s a huge pile-up of stocks,” said Tavares.
He said all abattoirs enjoyed a waiver in 2014, part of 2015 and a quota system for the rest of 2015.
Dale Saudan of Mvutsha Abattoirs also bemoaned the crippling effect of the levy on their business. He said he had a piling stock of about 2,000 hides at his abattoir.
He said his abattoir has unprocessed and wet blue hides in stock which were both failing to attract buyers.
Wet blue means the hide is free of hair and is tanned. It is used to produce several types of products such as shoes, garments, leather and upholstery.
“We’ve stocks of hides of different animals and we recently threw away goat and sheep hides because our abattoir is running out of space to accommodate them,” said Saudan.
“We’re pleading with the relevant authorities in government to assist us by putting up a waiver and treating this issue as an urgent matter”.
The Abattoirs Association of Zimbabwe said the viability of abattoirs had been compromised by the introduction of the fifth levy as it raised the price of slaughter services.
The leather industry in Zimbabwe is operating at below 50 percent of capacity owing to the tough economic environment and the introduction of the fifth quarter levy.
ZimTrade revealed recently that since 2012, Zimbabwe’s exports of leather products had been steadily declining.
It said the country exported $374,000 worth of leather products in 2014 compared to $591,000 and $486 000 in 2012 and 2013, respectively.