INSIGHT: When captains sail to State House

16 Nov, 2014 - 06:11 0 Views

The Sunday Mail

I also believe that captains of industry should meet Minister Bimha first, before meeting the President, to reconcile and consolidate their positions on fundamental principles regarding the trajectory industry should tread on.

How I would have wanted to discuss Zesa today.

How they tell us that their electricity tariff is one of the lowest in the region. Zesa says the regional average electricity tariff is US$0,14/kWh, while theirs is US$0,0983/kWh.

I would have told you how I used to believe it. How I felt sorry for Zesa when “cruel” Zera (the Zimbabwe Energy Regulatory Authority) denied their request to increase electricity tariffs by a paltry five percent.

But numbers, it seems, tend to conceal more than they reveal.

Zesa actually charges the most expensive tariff in the Southern African Power Pool region (consisting of 11 countries), if we are to leave out Swaziland.

At US$0,098/kWh, Zesa’s tariff is way above Sapp’s average of US$0,0754/kWh.

The DRC charges US$0,048/kWh; Zambia US$0,057/kWh; Botswana US$0,07/kWh; Malawi US$0,068/kWh, just to mention but a few.

Clever Zesa!

But I wish to look at a more exciting issue, whose momentum is silently gathering and whose occasion is imminent.

It’s about the envisaged meeting between President Mugabe and local captains of industry, which is a public secret.

Speaking at the launch of the Confederation of Zimbabwe Industries’ State of Industry Survey in September, Industry and Commerce Minister Mike Bimha said: “I told the President before year-end, we would want captains of industries to come and see you and talk to you about the economy. And he said they were welcome and that would have been done yesterday.”

So, it’s countdown time.

The interface comes at a time when the IMF recently highlighted that Zimbabwe’s economy is at a “crossroads”.

The Fund, in its review of the country’s preceding staff monitored programme, earlier this month, said: “The economic situation (in Zimbabwe) remains difficult. The post-hyperinflation rebound has ended.”

The meeting with the President should, therefore, be an important opportunity to deliberate on fresh perspectives aimed at charting a new path from the “crossroads”.

With the adoption of the new Constitution in 2013, Zimbabwe launched a new chapter in her commitment towards industrialisation.

Thus, in Section 13(c) we read that the State “must take measures to foster the development of industrial and commercial enterprises”.

Being a lawyer and economist, the President understands that perfectly, in my view. He has been showing keen interest in the manufacturing sector.

Minister Bimha is on record as saying: “Whenever I meet him (the President), his question is about industry. He has that concern. He wants industry back on track.”

In September, President Mugabe vowed that Bulawayo (one of the worst victims of de-industrialisation) will never die; pointing out that the city was chosen to host the forthcoming sixth edition of the African Union Youth Games as part of plans to revive its industrial capacity.

The President has also gone to the extent of asking Minister Bimha to prepare a detailed report on the state of industry with a view to finding solutions to the constraints that industry is facing.

The report has already been submitted to him.

Captains of industry should capitalise on this zeal and commitment from the President to seek his interventions on reviving the sleeping giant of the manufacturing sector.

My main question, therefore, is: Is industry ready to meet the most powerful man in the Republic?

What I should hasten to advise the captains of industry before they discuss any manufacturing issue with the President is to request regular engagement with him, and not to make it a once-off meeting.

Perhaps a quarterly engagement will do.

In South Africa, they actually have what they call President’s Business-Government Working Group on Inclusive Growth.

I also believe that captains of industry should meet Minister Bimha first, before meeting the President, to reconcile and consolidate their positions on fundamental principles regarding the trajectory industry should tread on.

In my view, the captains of industry are apparently not in concert with the minister on the subject of protecting local industry.

The minister has, in many instances, indicated his low, if not lack of, appetite for protection.

Early this year, he told delegates to the 2014 Economic Outlook Symposium that: “I have had numerous calls from people asking that we close our borders and see what happens, but we do not want to protect inefficient industries that will come up with ridiculous prices that will kill people.”

He also bluntly told captains of industry in their own den, at CZI’s 2014 congress, that: “We will do all we can to support local industries. Please note that support is all it is, not protection.”

This is despite the fact that, at the same occasion, CZI past president Mr Kumbirai Katsande had boldly highlighted that: “We, however, have to take some cautioned, but radical measures to close the borders and protect our local industry or we will continue to die a slow but painful death. Let us take a bold step as industry and Government to have minimum imports.”

Both talked about “dying” from having protection and not having it.

This confusion is not good when going to meet the President, which is why they should be of the same mind in terms of which kills what.

Captains of industry, I hear, call Cde Bimha the “minister of hope”. Perhaps it’s because he used to be one of them, an industrialist.

However, I doubt whether “hope” springs from going against the path defined in the National Trade Policy (NTP) and Industrialisation Development Policy (IDP).

It is inconsistent with the IDP to remove protection from the picture.

The NTP says: “The tariff regime will be applied on a sector-by-sector basis and dictated by the needs and imperatives of sector strategies as enunciated in the Industrialisation Development Policy.”

The IDP, too, was also unequivocal that “alignment of our tariff regime will be primarily an instrument of industrialisation” and that tariff “adjustment sought will, in the majority of cases, require a raise in tariff levels”.

It must, therefore, be noted that the contradiction and inconsistency now coming from the Ministry of Industry and Commerce frontman on the subject of protection shatters all “hope” for industrialisation and drains all audacity of such hope.

The call for protection is a genuine call that is concretely informed by the fact that competition from imports has been found, by the recent CZI survey, to be the number one factor that is hurting the doing-business environment in Zimbabwe.

It is also the top reason for retrenchment in industry.

Coupled with low domestic demand, which the survey found to be the biggest capacity constraint, it means that, without protection, we just have the perfect twin-complements of de-industrialisation in place.

The majority of the very little and steadily shrinking demand that has remained in this economy is being channelled towards cheap imported products and should we be “okay” with that?

Tariff protection is also our main instrument to promote the Buy Zimbabwe initiative, as the local procurement drive is still more of a moral suasion and less of a legal requirement.

The NTP says it will support relevant local institutions in “promoting the use and consumption of goods and services produced in Zimbabwe under the ‘Buy Zimbabwe Campaign’ initiative”, and apparently ends there.

In South Africa, however, they don’t only have protection, but strong local procurement regulations, too.

Minister Bimha’s South African counterpart, Rob Davies, earlier this year highlighted that the local procurement accord should take the form of an instruction rather than an appeal or advice.

If protection is our main actor, then let’s not be modest in unleashing it to deal with imports.

Industry captains should also advise the President to look into the issue of informal borders, which have become express highways to smuggle cheap imports into the country.

They should ask him to urgently shut down the 51 informal borders, to leave the 18 formal ones in operation.

The captains should, along the same vein, raise alarm to the President that 90 percent of trucks coming into the country through formal borders are currently not being checked.

This is a priority issue that should be addressed through adequate capitalisation and resourcing of our formal ports of entry.

Computerising borders will also come as a final nail, as it will weed out rent-seeking elements at the borders, with revenue benefits also being realised.

Manufacturers can cite the case of the Zimbabwe National Road Administration, which doubled its revenue collection after computerising.

Industrialists are so privileged to be meeting a man who is a good listener and who can whip everyone into line in his drive to bring the long overdue sanity in the manufacturing sector, which has been suffering from perennial capacity loss.

As lack of capital is crippling most of industry’s efforts, they should request the President to lead all their investment sourcing blitzes abroad.

There are companies in priority sectors that have gone bust, a situation that is not at all in the interest of the country.

CAPS, the pharmaceutical firm, has been liquidated right before our open eyes.

Take the same pharmaceuticals sub-sector where 98 percent of drugs are coming from the donor community whose dominant source is foreign markets.

What will happen if donors withdraw their support?

It is important for industry to adequately prepare for this august meeting with the President. Industry must be prepared to bring smart solutions and not just a catalogue of woes.

These, indeed, are exciting times in the Republic. The jacarandas are blooming. The civil servants’ bonuses are coming. Christmas is around the corner.

If space weren’t jealous, I’d have finished the catalogue, but perhaps I should end with reiterating one, that the captains are sailing to State House!

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