Industrialising the sleeping giant

IN A previous instalment, we listed certain considerations for Zimbabwe as it seeks to reindustrialise. The three we focused on were closing the current industrial infrastructure gap, adoption of advanced technologies to increase efficiency and focusing on the country’s comparative advantage.

Here are a few more things that the country needs to look at to properly secure its future as an industrialised nation in the global village.

Incorporate regional and international scale from the onset

Adopting a tech-driven industrialisation process has the ability to deliver cost-effective mass production which requires a sizeable market to absorb the produced goods.

Unfortunately, Zimbabwe’s population of circa 15 million is not big enough to cater for mass production that can allow the country to harness the benefits of economies of scale.

Through the recently signed Continental Free Trade Agree (AfCFTA) and other existing regional trade agreements through SADC and COMESA, Zimbabwe can establish mutual trade agreements with other African countries in the region to grow the market for its products.

However, there is need for the nation to focus production on specific goods that Zimbabwe can competitively produce than any other country in the region.

For each of the mass-produced good in Zimbabwe, there needs to be at least three countries that are ready to absorb the product.

Develop regional and international industry value chains

Over the preceding decades, industrialisation has evolved from end-to-end manufacturing to a strong emphasis on specific industry value chains to allow efficient allocation and use of scarce resources across the globe.

As Zimbabwe seeks to re-industrialise, it needs to identify industries to develop end-to-end value chains and industries to feed into regional and international value chains.

Zimbabwe, for instance, is well-positioned to develop an end-to-end value chain for food production, starting from the growing of agricultural produce to the production of food products.

On the other hand, the country could feed into the regional and international vehicle value chain by focusing on the production of environmentally friendly lithium-ion batteries.

Understanding that the country can- not be good at producing everything could push the Zimbabwean Government to close some industries that are not regionally and globally competitive or at the very least, restructure them to feed into other regional and international value chains.

Efficient supply chains

Development of a robust competitive industrial sector that is capable of scaling to regional and international markets is heavily dependent on the outbound and inbound supply chain system. Across the globe, there is an argument for localised supply chains (inbound and outbound) to reduce shipping costs, shorten delivery times, and bring employment to local communities.

As Zimbabwe seeks to reindustrialise, it needs to evaluate the economic pros and cons of extending supply chains from main manufacturing plants to other local and regional markets.

Currently, the country has very inefficient supply chains due to various factors, including inadequate and dilapidated infrastructure and high fuel costs, which justifies the need for localised supply chains.

However, the argument for localisation of supply chains can only be justified in the presence of robust inbound supply chains that provide direct and cheaper options for sourcing of inputs for newly established plants.

Industrial jobs of the future

With unemployment at staggering levels, job creation through industrialisation becomes the centre of focus, neglecting the quality of the type of jobs created.

The skills base of the Zimbabwe working population has gradually shifted from unskilled to semi-skilled and highly skilled as the majority of the population got educated.

This shift in skills provides Zimbabwe with an opportunity to create highly productive jobs that meaningfully grow the economy and raise the wages of general workers. In addition, the creation of semi-skilled and high-skilled jobs is of paramount importance if Zimbabwe is to attract back Diaspora talent.

Failure to produce high quality jobs through reindustrialisation would result in further brain drain as recent university graduates prefer to work in advanced industries abroad.

Adopting tech-driven industrial processes would result in the loss of some low-skilled jobs, but would also result in the creation of more skilled jobs. The Government’s challenge would be up-skilling unskilled workers through industry focused vocational training institutions, which are very few and poorly resourced at the moment

Research and data-driven industrial development

There is no doubt that “data is the new oil” and should be at the core of Zimbabwe’s industrial transformation. New tools like data science and artificial intelligence have the ability to bring evidence to the fore to improve industry operations.

Currently, the country has a dearth of such skill set to improve analytics at the industry level.

There are also vast opportunities for knowledge transfer as Zimbabwe reviews the existing industry structures and transforms them to align with international standards and market demands.

In addition, there is limited interaction between institutions of higher learning and industry, which has stifled research and innovation within Zimbabwean industries.

Setting up an African Industrialisation Programme at one of the leading universities to facilitate knowledge exchange and transition of graduates to industry is one step towards closing this huge gap.

Evidence and robust research should guide those decisions to deliver sustainable and transformational change.

Zimbabwe has vast examples to learn from such as Singapore and Rwanda to avoid industrial mishaps and define an industrialisation path guided by evidence on what works for Zimbabwe.

Develop the industry ecosystem by embracing informality, establishing new industry linkages, and promoting entrepreneurship As Zimbabwean industries struggled to stay afloat over the past decades, linkages within the sector also fell apart, resulting in high levels of fragmentation, duplication of efforts and inefficiencies.

To yield sustainable growth, the industry sector should be highly connected to other drivers of the economy. Two key peripheral players that need to be closely linked to the industry sector are informal stakeholders and entrepreneurs. ◆ Formal industries need to embrace informality and work close with informal players as contributors to the same value chain. Edward Muguza is the founder and director of DRG, an African-managed development think-tank and business advisory firm in Harare. edward@drgafrica.com Read full article on www.herald. co.zw