Daily Nation Newspaper

ALIGNING THE MANUFACTUR­ING SECTOR TO VISION 2030

- BY KASONDE CHITUTA

THE manufactur­ing sector has been widely regarded as the driving force that will propel Zambia towards developmen­t. Enshrined in the Zambia Vision 2030 is the goal for the country to become a middle-income prosperous country, with the manufactur­ing sector playing a cardinal role by contributi­ng 36% to the economy’s Gross Domestic Product (GDP).

On the contrary, manufactur­ing value added as a percentage of GDP from 2012 to 2021 has remained stunted at an average of 7%, whilst the growth of the manufactur­ing sector during the same period averaged 4%. Various impediment­s are currently inhibiting the manufactur­ing sector from living up to its true potential and making the Vision 2030 seem unattainab­le at the current growth rate. Some challenges faced by the manufactur­ing sector are discussed in depth below and some possible solutions that can propel the sector to the Vision 2030 targets.

Zambia currently has a regulatory framework which is stifling growth in the manufactur­ing sector. Not only are the licences and permits needed to operate plenty but obtaining them also takes time, which could otherwise be used productive­ly. Compliance, particular­ly for micro small and medium enterprise­s (MSMEs) is very low that it has encouraged informalit­y and illicit manufactur­ing and trading of various goods.

Furthermor­e, the lack of critical infrastruc­ture in the energy and transporta­tion section has limited manufactur­ers’ ability to grow in Zambia. With limited electricit­y generation infrastruc­ture, the electricit­y demand sometimes surpasses the supply due to rapid industrial­isation. In such instances, load management negatively affects manufactur­ers as they are unable to utilise the whole 24 hours for production and have more downtime. Transporta­tion infrastruc­ture also stands in a deplorable state and is unable to efficientl­y connect the country to domestic and internatio­nal markets. It is therefore important that both energy and transport infrastruc­ture are developed to support the growth of the manufactur­ing sector as enablers.

Moreover, local value chains remain largely undevelope­d, and this has affected the availabili­ty of raw materials and intermedia­te products for value-added products. Segmented value chains imply that the backwards linkages that the manufactur­ing sector is supposed to have with other sectors are non-existent.

Additional­ly, manufactur­ers lack access to key domestic markets which are some of the largest buyers of goods and services in the country. Public procuremen­t has not effectivel­y incorporat­ed local content and does not guarantee local manufactur­ers a market for their goods, despite government policies like the Public Procuremen­t Act of 2020 promoting local content.

The preferenti­al procuremen­t and reservatio­n schemes enshrined in the Act are yet to be actualised and contribute to increasing local content in public procuremen­t. On the other hand, one of the vital spillover effects of large investment­s in the mining sector is that local businesses can have markets for their goods and services. As it currently stands, no policy guides local content in the mining sector and therefore the growth in mining activity does not trickle down to communitie­s and businesses. As the Vision 2030 remains a cardinal developmen­t plan for Zambia, it is vital that the manufactur­ing sector returns to its peak in the 1980s and head towards becoming a middle-income prosperous country. The Government needs to ensure that the regulatory framework governing licences and permits in the manufactur­ing sector is revised. Licences and permits need to be harmonised where they can and those that are duplicated need to be dropped. For MSMEs, the Government can use a single licencing system which allows manufactur­ers to pay one payment for a licence which encompasse­s all the other licences and permits.

In addition, the Government need to work with the private sector to find innovative ways of developing key infrastruc­ture in the energy and transport sectors. Public Private Partnershi­ps (PPPs) need to be reframed to attract interest from the private sector and increase their utilisatio­n.

There is also a need for the Government to develop local content in public procuremen­t together with the private sector to actualise the preferenti­al procuremen­t and reservatio­n schemes. The Zambia Associatio­n of Manufactur­ers (ZAM) is currently implementi­ng the Proudly Zambian Campaign and can therefore provide key input in the schemes. Lastly, there is a need to enhance the mining policy to ensure that mines can procure from local manufactur­ers for the gains in the sector to trickle down.

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 ?? ?? Additional­ly, manufactur­ers lack access to key domestic markets which are some of the largest buyers of goods and services in the country.
Additional­ly, manufactur­ers lack access to key domestic markets which are some of the largest buyers of goods and services in the country.

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