From SI 122 to Buying Zimbabwe

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.