Zimbabwe is plugging loopholes in the grant of rebates to clothing manufacturers. Some players in the garment making sector have been found to abuse the facility over the past six years, which has led to revenue losses and distortion of both national and regional value chains and of linkages through various malpractices. These include disposal of fabrics intended for value addition on the domestic market, transfer pricing, under-invoicing and incorrect declarations to evade local taxes while taking advantage of preferential trade agreements to realise huge profits in regional markets.

The rebate was aimed at reviving the clothing value chain and was initially granted on select imported fabrics for use in the manufacture clothe g for a period of one year. Materials eligible for the rebate are from manmade yarn and include denim, cotton sewing thread, woven fabrics of polyester staple fibers, chenille fabrics, tulles and other net fabrics. The fabrics are kept in bonded warehouses from where they are withdrawn under supervision. However companies make withdrawals misrepresenting the amount of material they need to make apparel.

Some players in import material that is locally available and later produce garments for the international market, a development that threatens to destroy downstream players such as cotton farmers, ginners, spinners and weavers.