SI64 and local content : From the trigger to the destination

28 May, 2017 - 00:05 0 Views
SI64 and local content : From the trigger to the destination Mike Bimha

The Sunday Mail

Munyaradzi Hwengwere
Tightening our local procurement laws , pushing for local preference and stopping the dumping of goods in our country not only made sense but it was the right thing to do.  SI64 ‘s impact on the local business was a small demonstration on why Buying Zimbabwe is  basis for a better Zimbabwe.

Zimbabweans are creating a bad habit of intentionally entangling themselves in discussions over terms without bothering to understand  the context and meaning of the words.  When the Ministry of Industry and Commerce introduced SI 64 in 2016, various media houses and well meaning people fell over themselves to proclaim that the country had banned imports.

Try as Minister Bimha did to indicate that no such thing had happened, up to this day, there is a clique whose verdict  is that  Government banned imports.  This is despite the fact that the statutory instrument in question explicitly underlines its intention to manage and not ban imports. In any case the instrument deals with less than 50 products out of thousands of Zimbabwean products.

Our shops also continue to hold a number of imported products. But this evidence clearly means nothing to one whose mind is made.  The tragedy is that we seem not to learn that this focus on trivial instead of the fundamental is causing our country to lag behind many of our developed partners in terms of wealth and job creation as well as guaranteeing prosperity for all.

A case in point is the current confusion over local content in relation to SI 64.  This latest verbal entanglement appears to have been triggered by Minister Bimha’s talk in Bulawayo where he indicated that Government was to replace SI64  with a much more comprehensive and robust local content policy.

That statement was interpreted by media to mean an immediate repeal of SI 64.  Expectedly our industry who should also shoulder the blame for resting on their laurels and not listening to various pronouncements  by the Government to the effect that the SI64 was by nature short term, went  in panic mode.

Many  were thrown into a state of shock and pointed fingers at Government for making an abrupt announcement  which threatened to reverse  gains that had arisen from  the import management provision.

Forgotten now was that the Minister has always made it clear that SI64 was not here to stay.  To his credit Minister Bimha was quick to calm the nerves of the restive business community  by pointing out that Government was in no hurry to scrap SI64  but that it was now in the process of finalising a local content policy whose effect was to consolidate gains from SI 64.

This being Zimbabwe, the clarification served only to indicate that Government was a perennial flip flopper.  Many saw local content as totally unrelated to SI64 and thus concluded that by scrapping one for the other,  Government was changing goal posts mid stream and in knee jack response to retaliatory measures by our trading neighbours.

Words now stood in the way of purpose and intentionality.  As the debate raged one could not help but realise the serious lack of understanding that is pervading our various media houses, economic commentators and business community.

I seek here to demystify this cloud of confusion and hopefully help trigger a debate  that would steer us away from simple terms but an understanding of the real challenges our country faces. It is fact that the various import management instruments put over the course of years by Government, including SI64, have done wonders towards reversing the slide of the manufacturing sector and reducing the  accumulating current account deficit.

Had policy makers remained blind to realities of global trade by continuously adopting these neo liberal policies of open markets at a time the USA has woken up to realities of unfair trade and elected a President on the back of building walls and protectionism, where would Zimbabwe be now, which has faced sanctions and has low foreign domestic investments.

It made no economic sense to fail to understand that the basis of development requires that wealth generated by a country must be jealously guarded. Tightening our local procurement laws, pushing for local preference and stopping the dumping of goods in our country not only made sense but it was the right thing to do. SI64’s  impact on the local business was a small demonstration on why Buying Zimbabwe is  basis for a better Zimbabwe. But stopping at SI64 and other trade management instruments makes no sense at all and if left alone can be inimical to its very purpose of saving jobs, preserving capital and wealth.

The simple reason is that as an import management measure, the instrument deals primarily with the end product irrespective of weak linkages that may exist with rest of the economy.

As such instruments such as SI64 besides creating retaliatory measures from countries such as South Africa and Zambia which have actually benefited from their promulgation, through increased importation of finished products that are coming through in the disguise of raw materials, increases smuggling, undermines export competitiveness and in many instances results in low job creation.

As the Reserve Bank would testify, the pressures on Nostro accounts are highly correlated to demands by companies whose products are protected.  The reason is simply because most of such companies have a higher local content that is imported.

This is in the form of packaging, and various raw materials that in a normal scheme of things would be sourced locally.  An example is the fact that despite the growth in cooking oil sector, most of the oil is not processed from local maize, ground nuts, oil, sunflower or cotton. Instead some reports suggest that the oil is landing here ready for packaging.

Out of every 10 dollars for instance that accrue to that product 9 dollars continue to go outside the country.

The local farmer and anyone else in between is not benefiting.  While there is really nothing wrong with triggering a process that leads to the recovery of industry as SI 64 has done, what we must understand is that what we did is to trigger a movement towards a new dispensation.

That movement  must thus be properly structured, planned and understood in terms of our capabilities, competitive edge, value chain and an objective to  turn Zimbabwe into a prosperous industrialised nation. It thus makes every sense, for Zimbabwe to anchor its trade policies as represented by various import management policies for instance SI 64 on robust local content policies.

The failure to do this may give rise  token Zimbabwean products that do little to preserve our wealth and link to other sectors of the economy.

The local content policy seeks to do precisely that.  A well structured and managed local content policy is built on the premise that for Zimbabwe to develop, we must encourage and promote local products that demonstrate strong linkages with other sectors in the country.

These products must carry a higher percentage of inputs that are sourced from within the country. Take the iconic product of Mazoe for instance.  Within it are oranges from Beitbridge , sugar from triangle and packaging from a local supplier possibly Hunyani .

As the products lands on a local retail outlet, small holder farmer , transporters and myriad of service put in their contribution  and make a bit of money.

For every Mazoe product  sold locally and in export markets a whole value chain benefits. The same make applies to a number of cereal and dairy products that our country produces. Such products give less headaches to our monetary authorities and in fact provide a basis for Zimbabwe to begin assessing ways and means of ensuring that the country competes more on the international market which in turn imply we also start to negotiate for trade terms that ensure the free flow of such products in export markets.

With such mindset our conversation also begin to shift towards the real obstacle we face, that of building our regional and global competitiveness.

SI 64 was a trigger to a needed industrialisation programme.  With it we demonstrated areas where as a country we can compete, we gave hope to business and built a foundation for the real deal which is to start a conversation of growing our economy for the long term.

As such the import management must always be treated as short term and part of long journey.

Those that saw trade protectionism as bus stop need to be disabused from this notion and told to raise their eyes to the ultimate programme needed to turn Zimbabwe into competitive country.  The  tragedy for the many Israelites was to thing crossing the red sea with Canaan.

A number died in the desert for such mistaken view.  This by no means suggest that coming up with a local content policy will be easy. Neither does it mean that its implementation will be a walk in the park.

On the contrary, its much more difficult to put in place an effective local content policy that it is by a stroke of announcing an import management statutory instrument .

The challenge is to rise up to this challenge by bringing stakeholders to brace for a new game in town.

  • Munyaradzi Hwengwere is CEO of Buy Zimbabwe, and spokesperson of the Ministry Industry and Commerce Import Management Committee.

Share This:

Survey


We value your opinion! Take a moment to complete our survey

This will close in 20 seconds