Cabinet Charts Ambitious Course…

…Empowerment, Health Self-Sufficiency, and Enhanced Safety Top Agenda

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Harare – Zimbabwe’s Cabinet, under the chairmanship of His Excellency President His Excellency Dr. ED. Mnangagwa, concluded its fifteenth meeting with a series of approvals poised to significantly reshape the nation’s economic landscape, public health sector, and legal framework.

The comprehensive agenda, spanning community empowerment, industrial growth, public safety, and international cooperation, signals a determined push towards national development.

The breadth of topics addressed in a single briefing indicates a holistic, interconnected approach to national development, aiming for systemic change across multiple fronts rather than isolated policy adjustments.

This suggests a government focused on building resilience and fostering comprehensive progress.

A cornerstone decision from the Cabinet meeting was the approval of proposals for the operationalization of the Community Share Ownership Trusts (CSOTs) and Reserved Sectors policy.

This move underscores a renewed commitment to ensuring that local communities directly benefit from the extraction and exploitation of natural resources within their areas.
CSOTs were initially established in 2013, with 61 trusts formed and 58 subsequently registered, under a legislative framework stemming from the 2007 Indigenisation policy.

The core aim was to empower indigenous people and rural communities by mandating that foreign mining businesses dispose of a portion of their shares to local CSOTs.

This initiative sought to rectify historical imbalances where local populations did not fully benefit from their natural resources.

In some instances, CSOTs have indeed contributed to rural development by funding essential infrastructure such as vocational training centres, schools, clinics, and improving water and sanitation facilities.

However, despite their noble objectives, these trusts have faced significant operational hurdles.

Research indicates issues such as a lack of meaningful community consultation in project initiation and decision-making, alongside considerable interference from external sources, including politicians.

To address these shortcomings and inject new vitality into the programme, the government will undertake a comprehensive review of the implementation framework.

Key measures include providing corporate rescue support to struggling Trusts, directly acknowledging that some are facing financial distress.

This explicit mention of “corporate rescue support” and “comprehensive audits of fund utilisation,” alongside the development of “robust economic empowerment policy and regulations for effective and transparent management,” is a direct acknowledgment of past failures and mismanagement within these trusts.

This signifies a crucial shift from merely establishing trusts to actively ensuring their integrity, financial viability, and operational effectiveness.

Furthermore, the government plans to develop robust economic empowerment policies and regulations to ensure effective and transparent management of CSOTs, publicize their existence to enhance community awareness and engagement, and conduct comprehensive audits of fund utilization to ensure accountability and prevent misuse.

The proposed changes, particularly the emphasis on transparency, robust regulations, and public awareness, suggest a potential pivot from a purely top-down “empowerment” model to one that actively seeks genuine grassroots participation and accountability.

If these measures are effectively implemented, they could significantly enhance local ownership and sustainability of development projects, directly addressing past criticisms of non-consultation and external interference.

Cabinet also received and noted a significant update on the Pharmaceutical Value Chain, identified as a key priority within the Zimbabwe Industrial Reconstruction and Growth Plan (ZIRGP) for 2024-2025.

The ZIRGP is designed to stimulate economic recovery and industrialization by addressing critical manufacturing challenges and promoting value-added goods.

The core strategic objective for the pharmaceutical sector is ambitious: to dramatically increase the proportion of locally produced essential medicines from 30% to 60% by 2025.

Concurrently, the plan aims to reduce the national medicines import bill from approximately US$220 million in 2020 to around US$100 million by the end of 2025.

The sector has shown remarkable growth since 2020, demonstrating a successful initial phase of the ZIRGP for pharmaceuticals.

This suggests that the government’s strategic focus on import substitution and local manufacturing, spurred partly by the COVID-19 pandemic’s supply chain disruptions, is yielding tangible results, creating crucial momentum for the ambitious 2025 targets.

The pharmaceutical market size was estimated at US$400 million in 2023. Local production of essential medicines surged from 15% to 36%, and capacity utilization significantly rose from a mere 12% in 2020 to 51% in 2024.

The number of local producers increased by 56%, from 9 to 14. Pharmaceutical exports, though still lower than imports, rebounded by 15.6% between 2020 and 2024, growing from US$4.5 million to US$5.2 million.

Notably, two indigenous pharmaceutical retailers have successfully transitioned into manufacturing, and the Medicines Control Authority of Zimbabwe achieved Maturity Level 3 of the World Health Organisation’s benchmarking tool, signifying a stable and well-functioning regulatory system.

The COVID-19 pandemic played a catalytic role, exposing global supply chain vulnerabilities and underscoring the critical importance of local manufacturing, which spurred investments and expansion within the country.

To ensure sustained growth and achieve its ambitious targets, the government will implement several key measures.

Government is set to provide adequate funding to NATPHARM, the state-owned drug procurement firm, and ensure sustained uptake of locally produced drugs by both public agencies and the private sector.

NATPHARM will be specifically directed to procure 300 lines of locally produced medicines, with an estimated annual saving of up to US$75 million.

The establishment of a Pharmaceutical Revolving Fund to provide affordable financing for the industry is set to go a long way in the rescue plan.

This fund is partially intended to be financed by proceeds from a Sugar Content Tax.

Government is set to reinstate VAT zero-rating on pharmaceutical products. This policy change will effectively remove VAT from these products, allowing registered manufacturers to claim input tax credits, thereby reducing costs and potentially making local drugs more competitive.

Authorities are also set to reduce reliance on drug imports by establishing robust local drug testing capabilities.

Currently, comprehensive state-run facilities for quality control and efficacy testing are limited, though efforts are underway to enhance drug detection for substance abuse.

Government will also prioritize the Sugar Content Tax to enhance financial support for the manufacturing of essential drugs. The reinstatement of VAT zero-rating on pharmaceutical products and the establishment of a Pharmaceutical Revolving Fund (partially funded by a sugar tax) reveal a multi-faceted fiscal and economic strategy to support local manufacturing.

This indicates a recognition that financial incentives and accessible capital are critical levers for overcoming the industry’s high operational costs and limited access to credit , ultimately aiming to make locally produced drugs more competitive and affordable for the population.

Despite the positive path, government is poised to take headlong the problems the pharmaceutical sector continues to grapple with such as high operational costs, the absence of a sustainable supply chain management framework, inventory management issues, overdependence on foreign medicines, and poor access to foreign exchange.
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