The Sunday Mail
SADC will hold a special summit on re-industrialisation later this year, as the bloc seek ways to boost manufacturing in economies across the region.
Industry and Commerce Minister Mike Bimha told The Sunday Mail Business last week that the summit will be crucial for reversing de-industrialisation, as it aims at creating linkages for Sadc manufactured goods tradable in domestic, regional or global markets.
He, however, could not be drawn to provide details when the meeting will be held.
“As Zimbabwe, we have been pushing for the resuscitation of our industries and the economy. So we cannot miss out on any Sadc initiatives to re-industrialise regional economies.
“We want to make sure we have strengthened our manufacturing base, value addition and meeting international standards to satisfy both local and international markets.”
Southern African leaders put industrialisation at the top of Sadc’s agenda during its last summit held in Victoria Falls in August 2014, tasking a ministerial team on regional economic integration to develop a roadmap for industrialisation region-wide.
The share of manufacturing GDP dropped from 18 percent to 13 percent by between 2000 and 2014, according to the Sadc website, largely as a result of increased imports, especially from China.
In Zimbabwe, de-industrialisation has worsened in recent years with capacity utilisation falling to as low as 10 percent at the height of economic challenges in 2008. After recovering to 57 percent in 2010 following dollarisation, the figure has since dropped to 36 percent by end of 2014.
Key exports from Sadc are minerals – mainly platinum, gold, diamonds, copper, coal and nickel. Gas and oil discoveries in Angola, Mozambique and Tanzania are expected to become important exports. The production of high value goods will be crucial to boosting regional economies, Sadc executive secretary Dr Stergomena Lawrence Tax said at the Victoria Falls conference.
Through its Industrial Development Policy Framework of 2012, Sadc targets interventions in the areas of technology transfer and research and development, and promoting industrial upgrading through innovation.
It also aims to implement sector-specific strategies for regional value chain development; improving standards as well as technical regulations and quality infrastructure.
Minister Bimha expressed optimism on industry growth saying strategies were crafted to remedy manufacturing sector challenges.
“So far we have received a lot of inquiries from all over the world with potential investors keen on coming into the country while others have already made deals with Government. All these efforts are to enhance industry performance,” he said.
Government last year signed mega infrastructure deals with China as well as a US$3 billion platinum venture with Russia which will be the biggest platinum project in Zimbabwe.
Apart from this, Zimbabwe is also intensifying efforts to subscribe to the African Trade Insurance Agency (ATI) as the country drives towards improving its risk profile.
ATI is the continent’s credit agency whose main goal is to help increase investments into member countries and two-way trade flows between Africa and the world.
The agency provides export credit insurance, political risk insurance, investment insurance and other financial products to reduce business risk and cost of doing business in Africa.
Despite presenting a lot of investment opportunities due to vast mineral resources, Zimbabwe is generally regarded as a high risk investment area. The country is poorly rated on the ease of doing business world ranking.
Minister Bimha said the ATI would be one of the measures aimed at improving the country’s international risk profile status to boost regional and international investment.
“Zimbabwe is already a member of this, but has not been paying subscriptions and therefore unable to benefit from it, but by end of this year we should be fully incorporated into the ATI. We expect to start seeing more investment inquiries coming in,” said Minister Bimha.
The admission into the ATI will be achieved with assistance from the African Development Bank (AfDB) and Government is looking at putting together US$7,5 million as initial deposit.
Each country is expected to pay premiums of US$25 million.
“When we start benefiting from ATI, we can access lines of credit and international investors will come because we will be covered against trade risks,” said the minister.
Minister Bimha, however, lashed out at over-reliance on Government to solve industry’s challenges, saying companies must create ways of resuscitating themselves. He said Government’s role was to create an enabling environment through policies that improve ease of doing business and improve Foreign Direct Investment (FDI) inflows.
“Ideally, financing should come from private sector, financial institutions are the ones who should assist local companies, not Government,” he said.
Zimbabwe has experienced de-industrialisation in the past decade owing to operational challenges among them cash constraints and obsolete equipment.
In 2010, Government in partnership with Old Mutual, launched the Distressed Industries and Marginalised Areas Fund (Dimaf) to assist industries, especially those in Bulawayo, which used to be the industrial hub of the country.
Cabs — a subsidiary of Old Mutual — is administering the fund which has US$2 million ready for uptake.
