Local pharmaceutical companies call for level playing field, demand tax incentives

Pharmaceutical companies in Zambia are calling on government to level the playing field between local pharmaceutical manufacturing companies and importers in order to grow the sector.

Mohammed Umar, Chief Executive Officer of Pharmanova Zambia, said companies importing finished products do not pay any Value Added Tax (VAT) or Duty.

Umar said this during a Zambia Association of Manufacturers (ZAM) Pre-Budget Meeting in Lusaka graced by Finance Minister, Situmbeko Musokotwane, on Friday in Lusaka.

He urged government to act swiftly to protect the only three pharmaceutical manufacturing companies in Zambia.

“We need certain incentives from government for us to grow as a pharmaceutical manufacturing sector.

“One of the challenges is Value Added Tax (VAT) and Import Duty,” Umar said.

He said pharmaceutical manufacturing companies in Zambia pay VAT on raw materials coupled with the challenge of getting back VAT refunds on time because of cash flow issues.

Umar said Statutory Instrument (SI) 110 on Duty is not a solution to the problem if Zambia wants to grow the pharmaceutical sector.

“It is unfair for imported products to be more beneficial in terms of taxation than the locally manufactured products. We also appeal to government to allow us to import machinery VAT and Duty Free in order to expand the sector,” he said.

Umar said government should act in line with President Hakainde Hichilema’s vision of positive discrimination, where products should be bought from local manufacturing sector first.

“We need to grow the pharmaceutical sector in order to ensure a stability in Zambia’s medical supply chain which is not at the best at the moment. The measures by government can level the playing field between local pharmaceutical manufacturing companies and importers,” he said.

Umar said competitive pricing, producing local and job creation, all benefit Zambia’s value chain which includes the transport sector, packaging sector among others.

He said one of the reasons to grow the sector is the lessons from the COVID-19 pandemic where it was realized that there is need to be self-sufficient, when it comes to medicine and medical supplies.

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