From SI 122 to Buy­ing Zim­babwe

The Sunday Mail (Zimbabwe) - - OPINION & ANALYSIS - Mun­yaradzi Hweng­were ◆ Feed­back: munya.hweng­were@gmail. com

THIS is the mo­ment when we should say “we have come to bury SI 122, not to praise him”. For all the gains of Statu­tory In­stru­ment 122 of 2017, such as in­creased ca­pac­ity util­i­sa­tion from 39 per­cent to 50 per­cent and cre­ation of 60 000 new jobs, the truth is that it was meant to be tem­po­rary.

And as a trade mea­sure, it had its short­com­ings and could not — as an iso­lated pol­icy in­ter­ven­tion — fully ad­dress the un­der­ly­ing chal­lenges faced by our man­u­fac­tur­ing sec­tor.

True, with lim­ited FDI and cap­i­tal, lo­cal in­dus­try was al­ways go­ing to find it dif­fi­cult to re­tool and sup­ply the mar­ket fol­low­ing years of eco­nomic re­gres­sion.

Yet it must also be noted that both Govern­ment and the pri­vate sec­tor may have lost an im­por­tant op­por­tu­nity to en­sure that the le­gal in­stru­ment is used as a stop­gap mea­sure to tran­si­tion Zim­babwe from a pre­oc­cu­pa­tion with trade pro­tec­tion to the pro­mo­tion of lo­cal con­tent.

In­stead, we have re­mained fix­ated with the SI and squan­dered the op­por­tu­nity to in­ter­ro­gate its as­pi­ra­tional goal of driv­ing the trans­for­ma­tion of our coun­try to an up­per mid­dle-in­come econ­omy, which cre­ates jobs and guar­an­tees wealth for all.

The re­sult is that rather than em­pathise with in­dus­try, the ma­jor­ity of Zim­bab­weans are wel­com­ing the move to al­low un­re­stricted im­ports be­cause they be­lieve it will re­solve their im­me­di­ate chal­lenges, par­tic­u­larly with re­spect to both avail­abil­ity and ac­ces­si­bil­ity of var­i­ous goods and ser­vices.

Govern­ment’s hand was forced into amend­ing SI 122 ow­ing to short­ages of rea­son­ably priced ba­sic com­modi­ties in lo­cal su­per­mar­kets.

You surely can­not gov­ern over a coun­try where su­per­mar­ket shelves are empty, and yet there are in­di­vid­u­als who, through their own free funds, might have the ca­pac­ity to fill the gap.

Govern­ment’s de­ci­sion is un­der­stand­able and even our Buy Zim­babwe mem­bers un­der­stand this.

Our point of de­par­ture with the amend­ment of SI122 is that it could have been done bet­ter, and im­ple­mented in ways that do not re­verse the coun­try’s in­dus­tri­al­i­sa­tion agenda.

Our sin­cere hope is that we can still go back to the draw­ing board and cor­rect var­i­ous anom­alies that have oc­curred as a re­sult of the in­com­plete na­ture of the in­ter­ven­tion.

Zim­babwe’s pri­mary prob­lem at present is a per­sis­tent trade deficit, which stood at $2,8 bil­lion at the last count.

That deficit is re­flected in the cur­rent se­ri­ous for­eign cur­rency short­ages.

Al­ready, we have seen se­ri­ous dis­tor­tions in the mar­ket, with a num­ber of sup­pli­ers de­mand­ing to be paid in hard cur­ren­cies de­spite the known fact that the av­er­age Zim­bab­wean has no ac­cess to such the same.

Again, those who gen­er­ate for­eign cur­rency are ob­li­gated to share their funds with Govern­ment, which, in turn, uses the money to pro­cure essen­tial com­modi­ties such as fuel and medicines.

Not­with­stand­ing the com­mend­able progress in maize out­put as a re­sult of Com­mand Agri­cul­ture, the sec­tor is still un­der-per­form­ing.

For ex­am­ple, a huge chunk of the coun­try’s to­tal im­port bill — $2 bil­lion — is used to im­port ce­re­als, soya beans and wheat.

The dairy sec­tor has, how­ever, bucked the down trend. Over the years, it has shown that with bet­ter co-or­di­na­tion and col­lab­o­ra­tion among stake­hold­ers, lo­cal in­dus­try can be ca­pac­i­tated not only to deepen link­ages with farm­ers, but do so in ways that re­duce de­pen­dence on im­ported milk.

Three years ago, we had lit­tle lo­cal pas­teurised milk. To­day Dairi­bord, Dendairy and Pro­brands have lit­er­ally wiped im­ports from lo­cal su­per­mar­ket shelves.

The sec­tor is now mov­ing to­wards self-suf­fi­ciency. This is an ex­am­ple worth em­u­lat­ing.

Sadly, other sec­tors that ben­e­fited from SI64 (122) were not as proac­tive as the dairy in­dus­try. The cook­ing oil sec­tor, in par­tic­u­lar, should have taken a more proac­tive stance and worked on pro­grammes of con­tract­ing farm­ers to en­sure that they have in­creased syn­er­gies with the lo­cal agri­cul­tural in­dus­try.

The same ap­plies with our bread man­u­fac­tur­ers. This sec­tor is fully aware of the sen­si­tiv­ity of this ba­sic good but has been al­lowed to cry foul and de­mand scarce for­eign cur­rency while do­ing lit­tle to as­sure the na­tion of demon­stra­ble ac­tions to elim­i­nate wheat im­ports.

The amend­ment of SI 122 has, thus, af­fected both the good and the bad with­out com­ing up with mea­sures that en­sure that Zim­babwe does not fall vic­tim to open­ing its mar­kets to im­ported prod­ucts, most of which would come from very pro­tec­tion­ist neigh­bours.

In the end, what was meant to re­solve a tem­po­rary chal­lenge will po­ten­tially worsen our eco­nomic woes in the medium to long term if it is not ad­dressed.

That said, we have learnt our les­son and, thus, must ex­pe­di­tiously move to im­ple­ment the Lo­cal Con­tent Pol­icy, whose draft is with Govern­ment.

Such a pol­icy must seek to re­ward com­pa­nies that deepen lo­cal value chains while im­pos­ing penal­ties on those that con­tinue to use scarce for­eign cur­rency to bring in im­ported ma­te­ri­als.

This will not only en­sure that we sus­tain the re­cov­ery of our agri­cul­tural sec­tor, but crit­i­cally re­build our in­dus­trial ca­pac­ity as well as en­sure that when the African Free Trade mar­ket opens up, Zim­babwe has some­thing to trade with other coun­tries.

The other les­son for lo­cal man­u­fac­tur­ers from this painful episode is the need to take con­sumers se­ri­ously.

We have no choice but to en­gage them know­ing full well that the ma­jor­ity are un­em­ployed and, thus, can­not eas­ily re­late to mes­sages re­lated to jobs.

That will come once the ben­e­fits of in­dus­tri­al­i­sa­tion have be­gun to man­i­fest.

As we seek to en­gage con­sumers and de­fend our mar­ket po­si­tion, Buy Zim­babwe is run­ning a week-long con­sumer en­gage­ment and prod­uct ac­ti­va­tion ac­tiv­i­ties dur­ing the Buy Zim­babwe Week (6-9 Novem­ber).

We urge lo­cal stake­hold­ers to be part of this pro­gramme whose aim is en­sure that we do not lose ground to im­ported ma­te­ri­als.

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