The Zambia Association of Manufacturers (ZAM) has raised concerns over a new law introduced at a time when manufacturers are grappling with high production costs due to the ongoing energy crisis. Newly elected ZAM President Mohammed Umar stated that ZAM had taken note of the recently enacted Customs and Excise (Suspension) (Manufacturing Inputs) (Amendment) Regulations, 2025 (Statutory Instrument No. 76 of 2025), which modify the 2020 Regulations governing duty suspension on manufacturing inputs.
He acknowledged government’s continued efforts to review and align fiscal policies with national development objectives. Umar expressed serious concern regarding the specific amendment under Regulation 3, which now restricts the suspension of duty to only 50 percent of the applicable customs tariff rate for manufacturing inputs used in locally produced goods. “The amendment comes at a challenging time for the manufacturing sector, which is still contending with elevated production costs due to the energy crisis,” he noted.
Umar explained that many manufacturers heavily depended on imported inputs due to technical and capacity limitations within their domestic supply chains. He added that the previous duty suspension regime had provided essential relief, allowing manufacturers to remain competitive, maintain operations, and progressively increase local production. “The reduction in this suspension threatens to reverse those gains just as the sector was beginning to stabilise and contribute more significantly to import substitution and industrial growth,” Umar said.
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He warned that the increased cost of imported inputs will directly raise production expenses, thereby weakening the competitiveness of locally manufactured goods compared to imported alternatives that may benefit from more favourable duty regimes abroad. He further remarked that this amendment introduced uncertainty into the fiscal environment at a time when predictability is vital for business planning and investment. “Manufacturers have made long-term decisions based on the existing policy framework, and a sudden change risks undermining expansion plans and deterring further investment in local value addition,” Umar stated.
He emphasised that the potential repercussions extended beyond individual firms, posing a threat to employment levels and the wider network of suppliers and service providers reliant on a robust manufacturing sector. Umar observed that finished products imported from SADC Member States and AfCFTA countries enter Zambia duty-free under regional trade agreements. He argued that imposing taxes on raw materials while permitting duty-free access for finished goods creates a counterproductive incentive structure that disadvantages local industry.
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