The Sunday Mail
Enacy Mapakame
Business Reporter
THIS year’s Confederation of Zimbabwe Industries congress will ominously take place in the Midlands, a province whose iron, steel, asbestos and ferro-chrome mines have since slipped into an indefinite coma.
It also comes at a time when local industries face an existential threat from stubborn liquidity challenges, weak consumer spending, high production costs and the continued influx of cheap imports.
Statistics on the performance of industry have been grim, but there are signs that the economy is not in free-fall.
Latest figures from the National Social Security Authority indicate that company closures slowed down to 52 percent in 2014 from 75 percent a year earlier.
Similarly, the number of people who lost their jobs fell to 7 000 in 2014 from 9 000 in 2013.
This year’s CZI congress, slated for July 29-July 31 in Gweru, is themed “Unlocking Manufacturing Competitiveness”.
CZI president Mr Busisa Moyo told The Sunday Mail Business that the congress would focus on industrial competitiveness, policy inefficiencies, ease of doing business, imports and retooling.
“We will also look at what industry need to do to improve competitiveness and efficiency. As industrialists, we need to see what is stopping our products from being competitive on the export market or on the domestic market,” said Mr Moyo.
Industrial competitiveness is a company or sub-sector’s ability to produce and sell goods and services domestically or in outside markets profitably.
Last year, a Ministry of Industry and Commerce-led study indicated local industry was losing its competitiveness.
According to the study, Zimbabwe’s trade deficit spiked 223 percent to US$4,2 billion in the five years to 2013 from US$1,3 billion in 2009.
It was noted that the major factors driving company costs were labour, utilities, transport and trade taxes.
Recommendations were establishment of a holistic cost model to lower utilities and regulatory costs.
The model is yet to be developed.
Mr Moyo said while broader industry remained depressed, some sub-sectors were operating optimally and competitively.
Zimbabwean producers can now supply 100 percent of cooking oil needs at competitive prices.
But the CZI 2014 Manufacturing Sector Survey showed that direct foreign competition rose to over 90 percent in 2014 from 58 percent last year.
Most of the competing products are from Brics — a US$20 trillion economy comprising Brazil, Russia, India, China and South Africa.
Of the companies surveyed by CZI, 54 percent said business was not viable in 2014, an increase from 48 percent and 31 percent in 2013 and 2012, respectively. Only seven percent reported improvements in business viability in that period.
Last year, the industry representative body resolved to lobby Government to address the country’s porous borders, stringent laws, promote local procurement in all departments and expedite implementation of special economic zones.
Some issues were addressed but more needed to be done, said Mr Moyo.
“If we are to do a resolution matrix, some have been partially addressed, I would say 60 percent of the resolutions have been partially addressed although at a slower pace than we would desire.
“This prevents the flow of FDI into the country. Investors want clarity on policies like indigenisation and labour,” he said.
While imports still threatened production, Mr Moyo acknowledged the role Buy Zimbabwe was playing in promoting consumption of local goods. The public and private sector are slowly warming up to local procurement.
CZI has also been lobbying for removal of illegal sanctions by the European Union and United States.
Sanctions have not only made the cost of money from international financiers expensive, also heighten the country’s risk premium.
Said Mr Moyo: “CZI will not take full credit on that, but we have been doing our best to demonstrate that sanctions hurt the economy, industry and the ordinary man on the streets.”
Industry and Commerce Minister Mr Mike Bimha; Public Service, Labour and Social Services Minister Mrs Prisca Mupfumira; Reserve Bank of Zimbabwe Governor Dr John Mangudya, industrialists and officials from Brazil are expected to speak at CZI’s congress.
“Delegates to congress get to meet business fraternity across the whole of Zimbabwe. Furthermore, the issues discussed are of topical interest to business, as the subjects cover the entire spectrum affecting the doing of business,” said CZI chief executive Mr Clifford Sileya.
Government has moved in to protect local industry through the re-branding of the Price and Incomes Commission into the National Competitiveness Commission.
The Commission should address identified cost drivers such as labour laws, utilities supply, taxation, transport logistics and information technology.
As such, the Commission is expected to guarantee competitiveness of already existing local companies while enticing new investments.
