Minister says import substitution is the answer
INDUSTRY and Commerce Minister Mangaliso Ndlovu has urged businesses to buy most of their raw materials and even finished products locally to save foreign currency.
Shortage of foreign currency is a major challenge stifling productivity in the manufacturing.
Speaking during a breakfast meeting attended by industry and commerce executives in Bulawayo on Friday, Minister Ndlovu said:
“It is important for the country to save the scarce foreign currency by buying raw materials and finished products locally. The business community that include manufacturers, wholesalers and retailers should therefore only import those products or raw materials that cannot be found locally.”
He said the Local Content Policy developed by Government working closely with various stakeholders in the private sector was meant to reduce imports.
Minister Ndlovu said Government was working on improving the availability of foreign currency in the country to meet industry’s demand as well as other sectors of the economy.
He said the country had received about $6 billion in foreign currency inflows, which includes about $4,3 billion from export earnings.
“These figures far exceed those received by other countries on the continent,” he said.
For example, over the last three years countries such as Ethiopia, which has a population of 105 million people, generated $1,8 billion in terms of foreign currency earnings while Rwanda, which has 12,21 million people had $2 billion foreign currency earnings, according to the World Bank 2018 report.
Minister Ndlovu said unless Zimbabwe has a well-developed value chain system, the country will continue to have challenges with foreign currency as a result of importing raw materials which are supposed to be produced locally.
He commended companies that were supporting farmers that produce raw materials for them through contract farming.
Minister Ndlovu said by supporting the production of raw materials locally, the companies were helping in reducing the import bill.
In November 2018, Bulawayo-based personal care and agro-processing firm, United Refineries Limited together with its strategic partners launched a $30 million soya bean outgrowers’ alliance scheme to boost the crop’s output.
Pure Oil has also announced a $9 million scheme towards supporting contract farmers to produce soya bean required for the manufacture of edible oils.
“The best way to address our current account challenges is to produce, producing particularly for import substitution as well as for export development. Government has made significant progresss in reducing the budget deficit that has bedevilled the country for many years. This highlights the Government’s commitment to creating a conducive environment for economic growth,” said Minister Ndlovu.
In their separate presentations, representatives of business organisations such as the Zimbabwe National Chamber of Commerce (ZNCC) and the Confederation of Zimbabwe Industries (CZI) said foreign currency shortages remained the major stumbling block.—@okazunga