Towards building Africa’s US$ 3 trillion industry
ZIMBABWE today joins the rest of the continent in commemorating Africa Industrialisation Day, a day set aside to raise awareness in the international community on the challenges and opportunities for Africa’s industrialisation within the framework of the newly created African Continental Free Trade Area (AfCTA).
Industry can enhance productivity, increase the capabilities of the workforce, and generate employment, by introducing new equipment and new techniques.
Industrialisation, with strong links to domestic economies, will help Zimbabwe and the rest of the continent to achieve high growth rates, whilst reducing exposure to external shocks.
This will substantially contribute to poverty eradication through employment and wealth creation.
Industrialisation is not a new phenomenon in Zimbabwe as evidenced by national development policies such as the Transitional Stabilisation Programme (TSP) and the Zimbabwe National Industrial Policy (ZNIDP) that emphasise on value addition and local processing of natural resources, to boost export incomes and reduce vulnerability associated with exports of raw products.
Both policies seek to strengthen capital and financial markets, as well as improvement of business finance, especially for small-scale and rural industries.
In the recent past, calls for Africa to unite and put together vibrant policies that allow countries to diversify their economies and utilise local resources through comprehensive value addition have been amplified.
This is largely because most African countries, Zimbabwe included, continue to be among the poorest in the world, despite their vast natural resources.
The natural resources are exported in raw form, costing the continent billions of dollars in potential revenue.
The theme for this year is “Positioning African Industry to supply the African Continental Free Trade Agreement (AfCFTA) Market”.
In a statement to mark the day, UN Secretary-General Antonio Guterres said: “This year’s Africa Industrialisation Day marks a milestone as we highlight how the African Continental Free Trade Agreement will boost regional economic transformation and sustainable development.
“Africa’s manufacturing has been growing faster than the world average, but this pace needs to gain even more speed.
“With the new trade agreement ushering in a market of at least US$3 trillion and a consumer base of more than 1,3 billion people, Africa’s manufacturing sector is projected to double in size by 2025 and create millions of jobs.”
AfCFTA is expected to be one of the world’s largest single markets, accounting for US$4 trillion in investment across the 54 countries on the continent.
This is to be achieved by the creation of a single continental market for goods and services, with free movement of business persons and investments, paving the way for accelerating the establishment of the Continental Customs Union and the African Customs Union.
The UN Economic Commission for Africa (UNECA) thinks AfCFTA has the potential to raise intra-African trade by 15 percent to 25 percent, or US$50 billion to US$70 billion, by 2040.
It thus becomes imperative for the country to put in place a thorough import substitution strategy that will aggressively reduce the country’s import bill.
This will improve the country’s trade deficit whilst protecting economic activities which reduce increasing returns.
This is important for Zimbabwe because exporting primary products keeps poor countries poor.
There is need to move away from such activities and promote manufacturing and services sectors which create increasing returns.
To achieve this end, economists agree that for countries to industrialise, governments must issue provisional monopoly rights to cushion local companies involved in increasing return activities.
Government should provide all the necessary support and protect such economic activities from foreign competition until the sectors become competitive on the global market.
Additionally, to fully industrialise, the country should fully support sustainable small and medium enterprises growth and development through improving business linkages and market access among other support services.
The idea is to enhance investment flows in the country’s industrial sector, hence the private sector must come on board to lead the new growth trajectory.
For this to happen in line with Vision 2030, the country should aim at strengthening industrial value chains, improve agro-based industries, mineral beneficiation and promote export-led industrialisation to accelerate the country’s industrialisation.
THE most important security is that of the stomach,” says Lands, Agriculture, Water, Climate and Rural Resettlement Deputy Minister Vangelis Haritatos.
“How will Zimbabwe feed its growing population? We need to transform our traditional agricultural system to a system that is run on commercial basis. Agriculture is not a way of life but agriculture is a business.”
All this came out at the National Dialogue on Agriculture and Food Systems Transformation in Zimbabwe which was held in the capital recently.
The dialogue brought together agricultural experts, business, development organisations, commentators, Government policy experts, UN Food and Agriculture Organisation representatives, farmer groupings, business representatives, academics and political authorities to debate topical and interlinked political, economic and social matters connected to our agriculture.
Despite all the agricultural jargon and use of technical language of the Queen’s language, the debate centred on why Zimbabwe is failing to increase agricultural production, why it remains inefficient and why there is a sharp increase in hunger when harvests fail or drought strikes.
Can Zimbabwe feed itself? What needs to be done? Why are we failing to improve agricultural production despite the existence of mountains of blue ribbon agricultural policies.
Experts who met interrogated a number of issues giving evidence and opinions, drawing on available statistics, pouring out considerable literature and other indicators.
They all reviewed our record on food security, problems and successes of agriculture to date, future challenges and points of agreement and contention.
Zimbabwe is never short of “beautifully” crafted policies. The reports are rich in technical jargon and expertise.
In addition, we are fond of pointing out the problems but little when it comes to solutions.
This national dialogue provided a critical perspective to the debate on Zim’s agricultural and food systems transformation.
Zimbabwe’s food security depends on producing cereal crops, as well as increasing its production of fruits, vegetables and milk to meet the demands of a growing population with rising incomes.
To do so, a productive, competitive, diversified and sustainable agricultural sector will need to emerge at an accelerated pace.
Key issues addressed by the participants included the National Agriculture Policy Framework (2019-2030), the AGRINVEST Initiative, national input requirements and projections to 2025, agriculture production and value addition, farmers’ union perspectives as well as strategies to scale up the transformation of the country’s agricultural sector.
The impact of population growth and climate change on agriculture was discussed while other experts highlighted global dynamics in supply and demand of agric inputs and products.
The experts agreed that ACTION was what Zimbabwe needed to transform the sector.
“Zimbabwe must rise up and unlock its full potential to become a powerhouse in agriculture once again,” says Haritatos.
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“We have the capacity to produce our own vaccines and we need resources for this. If we produce our own vaccines we can save foreign currency and boost livestock production.”
OFTEN when companies take their operations abroad, a practice referred to as internationalisation, the main intention of the owners or managers is to increase corporate earnings.
They achieve this by reaching new foreign customers. They may also get closer to sources of raw materials and thus reduce costs.
Companies can also internationalise without having a physical presence overseas or exporting their products abroad. They can internationalise by having their shares traded in overseas stock exchanges. Doing so can enable a company to access new sources of international funding. This can help overcome a lack of relatively cheap capital at home.
Companies can also appoint foreign directors to their boards. This can augment the skills base of a company’s board of directors and other senior managers. Foreign directors can also represent those firms overseas and may enhance the firms’ international reputation.
Multinational companies have been much studied. However, the focus of these studies has been mostly restricted to subsidiaries of foreign companies operating in emerging economies.
This has left a huge gap. Hardly any research has been done on the impact of multinational companies that are born and bred on African soil. In a recent study, we provide new insights on the impact African multinationals have on their home countries.
Our study
We used a sample size of 80 multinational companies listed on the Nigerian Stock Exchange (NSX) during the period 2011-2015. Coincidentally, the period of study was also preceded by the introduction of the Code of Corporate Governance for Public Companies in Nigeria issued by the Securities and Exchange Commission in 2011.
This allowed us to assess how the sampled companies reconciled the demands of improved corporate governance regulations in Nigeria with the corporate governance demands of overseas jurisdictions where they also have operations.
Our sample comprised companies operat
“Agriculture can create jobs, spur exports and create wealth for us. We need to turn Zimbabwe into a net food exporter and this should be our major aim.
“We need dialogue on how we can move agriculture forward.”
Zimbabwe has a string of strategic frameworks to turn around its agricultural sector but a majority of these have not been implemented.
Without implementing and investing in critical agric sectors, how then can we make Zimbabwe self-sufficient, food secure and nutrition secure?
A major concern shared by experts included growing criticism made to the Zimbabwe’s investment security environment, regulatory constraints, macro-economic stability and other factors which scared investors in the agricultural sector.
Haritatos hinted that the new land policy which was being crafted would address some of the major concerns around security of investments.
“We have to get the land issue right, if we get this right, things will move,” he said. “We need greater private sector involvement in the agricultural sector.”
A participant further added that mindset change was critical to transform the country’s agricultural sector.
Dr Dumisani Kutyawo, a crop research expert, urged all stakeholders to find ways to boost horticultural production through the provision of support to smallholder farmers who are struggling to access the cold chain, to meet phyto-sanitary conditions set in export markets and the promotion of private- public sector partnerships in this sector.
He says Zimbabwe’s horticultural exports were still low and there was greater scope for expansion with the support of the new Horticultural Development Council.
Dr Pius Makaya, acting director of the Veterinary Technical Services says Zimbabwe needs to refocus its national disease surveillance programme to boost livestock production.
He expressed disappointment over the lack of financial resources for the livestock extension services which was crippled by lack of an efficient transport system, movement control infrastructure, lack of laboratory equipment and reagents.
“We don’t have adequate vaccines and most of our dipping infrastructure needs rehabilitation,” he says. “We have the capacity to produce our own vaccines and we need resources for this. If we produce our own vaccines we can save foreign currency and boost livestock production.”
Dr Bothwell Makodza, a livestock expert, outlined the state of the livestock sector, pointing out the potential that exists in cattle and small ruminants production if more was done to improve stockfeed production and the consolidation of the fragmented indigenous chicken markets.
“We have a herd of 5,6 million cattle and we need to do a new census,” he says. “At present we are producing 167kg per carcass and yet we can hit 200kg or 220kg per carcass. We are producing 75 million litres of milk a year against our 130 million litres demand. We are at 60 percent and we can easily meet our national requirement if we improve our stockfeed production and other ingredients needed to improve the condition of our herd.”
He says Zimbabwe produced 20 million broiler chicks in 2018 and had a greater scope to hit about 8 million chicks per month.
The country is estimated to hold 40 million indigenous chickens which are not being fully harnessed due to a fragmented market.
Prof Crispen Sukume says the rising cost of livestock feed had hampered efforts to boost the country’s livestock production.
“We are producing 1,5 million metric tonnes currently but we are only utilising 600 000 metric tonnes. Many farmers are now producing their own feed to cut costs,” he says.
“There has been a lot of competition for molasses. We need roughly about 45 000 metric tonnes of molasses but the bulk is being taken up in ethanol production. We are now importing from Zambia and Mozambique. So competition for molasses is putting a lot of pressure on the sector.”
He says Zimbabwe is not producing enough soya meal and was having to import from Zambia and Malawi. Cotton cake was also inadequate and Prof Sukume says there was need to find substitutes.
Dr Conrade Zawe, a director for irrigation and mechanisation, says the country needed more funds to rehabilitate irrigation equipment and schemes to ensure food security and increased productivity.
He says obsolete irrigation equipment, poor management, expensive energy and inputs and limited access to finance had affected the success of irrigation schemes.
Other experts highlighted the need to strengthen the country’s crop disease surveillance and the adoption of new technologies to boost productivity.
Participants agreed that the sector was doomed if it failed to engage women, the younger generations and the society at large around inclusive and sustainable growth.
Bringing his own perspective to the debate, Prof Mandivamba Rukuni insisted that Zimbabweans needed to create local demand to drive up agricultural production apart from relying on the export market.
He says it is imperative to invest more in all key agricultural sectors to reduce poverty and create opportunities that can improve the livelihoods of smallholder farmers.
All participants notably voiced Zimbabwe’s determination to rebuild its agricultural sector and reduce its heavy reliance on food imports.
They also called for less reliance on aid but on sound business practices, deals and investments in agriculture.
When everything was said and done, the major take-away from the dialogue was that raising productivity should to be the main engine of agricultural growth as the country moves forward.