Procure 60% from home, says CZI
THE public and private sectors should procure at least 60 percent of their needs locally to spur domestic industrial capacity and steer economic growth, the Confederation of Zimbabwean Industries (CZI) has said.
Speaking at the 6th Chartered Institute of Procurement and Supply 2019 annual conference, which ended in Bulawayo on Friday, CZI vice president, Mr Joseph Gunda, said Zimbabwe has recently lost focus on the significance of buying from local companies.
He challenged the business community to revisit the country’s industrial history, whose success was anchored on exporting at least 10 percent of their output.
Mr Gunda said a vibrant export model was what this country needs to deal with prevailing economic challenges.
“A suggestion has been made that ‘what if every local manufacturer was to export 10 percent of their production?’ I propose an easier ask, what if every company was to source at least 60 percent of their needs locally?” he said.
“While it is counter-intuitive to think cheaper is more expensive, the nation requires serious sensitisation and shared understanding that the evaluation must always beat national level and not at individual or company level.”
Mr Gunda, who is also general manager of Bulawayo-based General Beltings company, said the economy was facing a big challenge of foreign currency availability and utilisation. He said the country should be doing well with foreign currency inflows of around US$6 billion annually but was experiencing difficulties.
“The country’s balance of trade has been tilted in favour of imports since 2009 with imports extending to many products that the country has traditionally manufactured. The motivation was lower costs of imported products at company level but the picture changes when looked at from a national viewpoint as any foreign currency leaving the nation is very expensive,” said Mr Gunda.
“As the private sector the development of effective ecosystem strategies can unlock a lot of value for business and the economy at large.
“One large international concern has managed in the past two years to transform its supply chain from 30 percent local content to above 80 percent and the process have made their business much more resilient whilst empowering members of the supply chain.”
Local procurement is in line with the Local Content Strategy, which calls for increased use of local resources and services, importsubstitution, beneficiation and value addition of local resources. The strategy calls for more localisation of the supply chains with a drive towards reducing imported content of locally produced products with capacity utilisation not matching the local content procurement.
During plenary sessions, some delegates criticised local firms for failure to meet local demand while others complained that some products were of poor quality and did not match the value for money.
Others complained that local produce was expensive and castigated the involvement of middlemen who distort the market. In his response, Mr Gunda said industry challenges were a result of lack of access of adequate raw materials and foreign currency.
He said companies that export should support the local manufacturing industry to improve in quality and capacity.
Mr Gunda concurred that there were a lot of cost drivers that made local products expensive. For example, he said the use of generators in the absence of electricity was a cost burden.
The conference started on Thursday and ended on Friday. It was attended by about 90 delegates from procurement professionals, industry experts and auditors among others. — @pridesinstinctz