The industrial sector is expected to turn around in 2024, with a growth rate of 3.7%, the Institute of Statistical, Social and Economic Research (ISSER) has stated.

It is however expected to grow at a rate of 4.5% in the medium term (2024-2027).

Analysing the impact of the 2024 Budget on the private sector, the research institution said this projection is informed by an expected turnaround in growth in all sectors.

It, therefore, expressed optimism about the industry’s potential outturn, adding it is “Overly optimistic about industry’s potential outturn”.

But in 2023, industry is expected to contract.

Government in the 2024 Budget gave seven tax reliefs to industry. They included the extension of zero rate of VAT on locally manufactured African prints for two more years and the exemptions on the importation of agricultural machinery equipment and inputs.

ISSER thus called for monitoring systems to ensure its positive impact.

However, the research organisation made some recommendations, saying, that though the reliefs for Electric Vehicles are important it requires investment in complementary infrastructure for the benefits to be realised.

Again, it said locally manufactured African prints have been zero-rated since 2019, however, there continues to be an influx of cheaper imported prints. It therefore suggested to the government to introduce other policy interventions that help to curb smuggling and improve productivity in the textiles industry.

Relevant policies to assist industry

ISSER also proposed interventions to improve the business environment in 2024.

They include the enactment of the Business Regulatory Reform Bill to improve the quality and transparency of regulatory administration and establish a predictable regulatory environment.

Industry contracted in quarter 2, 2023

Industry contracted by -1.9% in the second quarter of 2023.

Except for the mining and quarrying sub-sector which expanded by 3.5%, all the remaining four subsectors contracted. They included Manufacturing (-0.5%), Construction (-11.7%).