The Sunday Mail
The Government of Zimbabwe — through the Ministry of Industry and Commerce — gazetted Statutory Instrument 64 of 2016. The Confederation of Zimbabwe Industries fully supports that move, which is part of a cocktail of measures aimed at driving Zimbabwe’s industrialisation and economic growth agenda.
This policy measure was a response to industry’s recommendations on what needs to be done to improve ease of doing business and to claw back on the trade deficit.
The list of products covered by SI 64 was recommended by industry, based on an extensive study and consultations with sector players on locally-available manufacturing capacities.
CZI believes that the move taken by Government will go a long way in stemming de-industrialisation, creating jobs, building industry capacity for exports and reducing the cost of production to competitive levels on the back of improved economies of scale.
The manufacturing sector’s capacity utilisation which stands at 34 percent (as at 2015) clearly shows that the country has idle capacity of over 60 percent and that can be utilised for import substitution.
Industry has been making strides towards retooling in spite of the difficult economic environment.
There is, therefore, need to acknowledge and support these efforts by creating an environment that favours the revival, resuscitation and development of local industry.
This, in fact, is in line with the country’s industrialisation and beneficiation agenda.
The economy requires a lot of money to develop industry and create jobs, and this SI provides that opportunity to utilise our current consumption to revive industry.
Since dollarisation, Zimbabweans have been importing goods worth an average of US$6 billion annually.
Cumulatively, this means as a nation, we have spent a total of US$36 billion on goods made by other countries.
Not only have we deprived our economy of this spending power, but we have literally exported jobs to other countries.
CZI acknowledges that we cannot manufacture everything locally, and where goods cannot be produced locally or where there is no capacity, imports should be allowed.
This is why the SI is not a ban, but a control measure where import permits are issued to allow for necessary imports.
We would want to highlight that corruption and smuggling at the borders must not be allowed to increase as a result of the measures.
This would defeat the objectives of SI 64.
CZI is calling for monitoring and evaluation on a periodic basis to assess capacity and demand in order to avert any potential shortages.
It also acknowledges the role of Cross Border Traders, especially during the period prior to 2009, and we believe they can still play a role in covering gaps by importing products in areas where there is no capacity and through market sourcing for locally-manufactured products and sourcing inputs that cannot be manufactured locally.
It is for this reason that CZI has embarked on dialogue with these traders to explore business opportunities that are mutually beneficial to all value chain players.
Given the serious nature of challenges that our economy is facing and the retooling that has taken place since dollarisation, CZI believes the nation’s imports strategy should shift from importation of finished products to importation of materials used as inputs by local manufacturers.
Management of imports is not new in our era.
In the past two years, we have seen how similar import restriction measures on cooking oil, milk and poultry, clothing, milling and one or two other sectors have paid off.
Our global economies also use import restrictions to reduce trade deficits.
Since the measures were instituted, there has been an increase in capacity, rising from as low as 6 000 litres to 20 000 litres per month in the past two years.
Further investments in the sector are being made, with new factories being set up even by those who used to export cooking oil into Zimbabwe.
These measures have also presented opportunities to support farming of oil seed crops through contract farming.
Plastic packaging manufacturers are benefiting from these restrictions to support oil expressers and also other suppliers in this value chain such as suppliers of cartons, printed labels and pallets.
There are further downstream benefits in other sectors of industry as well.
Since the introduction of these measures in the milk sector, we have seen capacity increasing from annual production of 47 million litres in 2010 to 58 million litres in 2015.
Companies in the dairy sector have — within that time — increased their dairy farmer support schemes to boost milk production.
There have been further investments in milk and milk products processing companies. This is testimony of what the SI can achieve for the Zimbabwean economy.
The list published in SI 64 is not cast in stone, and lobbying for additional items is a continuous process.
CZI calls on the authorities to support local industry in allocating money for raw material imports for the products so listed.
This will eliminate bottlenecks in raw material supply.
Government is one of the biggest consumers of imported goods.
We, therefore, implore Government to demonstrate by example by focusing its procurement locally and importing goods that are absolutely necessary.
- Mr Sifelani Jabangwe is the vice-president of the Confederation of Zimbabwe Industries. He wrote this article for The Sunday Mail