Private sector leads industry retooling, production
ZIMBABWE’S private sector is embracing the industrialisation agenda to achieve economic growth by retooling and injecting fresh capital in operations. Traditionally, the vibrancy of Zimbabwe’s industry was punctuated by well-knit industrial value chains that became the country’s hub for economic development. According to the Minister of Industry and Commerce, Dr Sekai Nzenza, the retooling exercise has been made possible through private sector participation and government support in the economy.
“The retooling exercise that has happened over the past two years, has put our industry on a firm position to be the key driver of the economy next year and our aim is to move up all our industrial value chains such that we bring efficiency and effectiveness towards a fully industrialised economy,” she said.
Government’s drive towards full industrialisation has been given a war chest of US$22.5 million from the International Monetary Fund Special Drawing Rights, money which is being committed to creating sustainable industrial value chains.
She added; “We have got a lot of idle capacity in our country hence we have engaged on a robust programme to create economic value out of this capacity for the benefit of Zimbabweans as such 2023 will be a busy year for our industry”.
Economists have always called on the strengthening of the local content policy to mitigate the effects of Zimbabwe’s vulnerability to external shocks. Calls to domesticate industrial value chains, especially in the agriculture sector come in the wake of the economy’s vulnerability to foreign shocks with disruptions to supply chains a common occurrence in the past few years. They are convinced that Zimbabwe will reap huge economic benefits by localising its value chains to stimulate downstream and upstream economic activities through strengthening import substitution strategies.
“We have been preaching the gospel of import substitution over the past years and the time to act is now such that we reduce the economy’s vulnerability to external shocks and that we avoid and minimise the burden we carry from this exogenous factor,” said Professor Gift Mugano, an economic analyst.
As a matter of strict policy, no raw material should leave the country unprocessed. Vertical integration of industry is primary at all costs. If no raw materials are to leave the country, it requires that the country has to develop the capacity to process them first (local value addition). This can be achieved by investing heavily in production facilities and rehabilitating our infrastructures, especially in the railway network, power and water.
“As a country, we made significant progress on import substitution when global supply chains were affected by the Covid-19 and we now need to solidify these gains through implementing a robust local content policy where almost everything should be of Zimbabwean origin from raw materials, packaging up to the final product,” said Titus Mukove, a development economist.
“There must be very strict import control measures with strong accountability and fairness. Before importing, companies must first prove that they cannot source inputs locally and this further encourages local supply companies to grow. The middleman has no place in that process,” added economist Tinevimbo Shava.
Economists agreed that the country must put in place incentives for industry to build local production capacity. For example, building a manufacturing plant must have huge tax incentives while in the agricultural sector, farmers must be able to write off costs for infrastructure development like irrigation which ultimately ensure food security and exports. According to other stakeholders, the US$8 billion Industry and Commerce Transformation Policy set in motion in 2019 to revitalise the country’s industrial base, is now bearing fruit through massive domestication of value chains across industries.
According to the Permanent Secretary in the Ministry of Industry and Commerce, Dr Mavis Sibanda, the manufacturing sector is now contributing a massive 18,4 percent to the GDP, with capacity utilisation now above 70 percent.
The vision to reduce the country’s huge import bill and create employment is driving the Ministry of Industry and Commerce to vigorously pursue the local content strategy.
“We are looking at internalisation of investments into the country because we have realised that this is a sustainable way to economic development and a sure way to eliminate externalisation of key resources as experienced in the past and we are very committed to see that this comes to fruition,” she added.
The Government in line with the aspirations of the National Development Strategy 1, has also set in motion an ambitious 2023 programme to retrace the country’s industrial footprint in line with Vision 2030 objectives. It is focusing on increasing industrial productivity to boost availability of local goods, ease imports, stabilise prices and create jobs.