The Sunday Mail
Talking Success
Sifelani Jabangwe
Government is critical to localising expenditures since it is the biggest procurer of goods and services in the economy.
In order to satisfactorily provide critical services and govern, Government gets the much-needed resources through collecting taxes from all economic agents.
This money is usually spent in the financial year in which it is generated.
The 2020 Budget projects revenues at $58,6 billion, while expenditure is forecast at $63,6 billion.
Thus from a local content perspective, the concern is on how much of this will be spent on supplies from local producers.
Most of these budgeted resources are coming from local individuals and enterprises, so it makes sense to spend them on the same.
Most often, high prices for local products and services are used to justify the sourcing of goods and services from foreign suppliers.
Even the up to 30 percent price difference between local and foreign goods costs the country more in terms of the thousands of forgone jobs.
Using local producers and local suppliers not only creates jobs, it also results in more accruing to Government from its own expenditure.
Conversely, imports might yield zero taxes, except in instances where Value Added Tax (VAT) is charged.
As highlighted earlier, Government — be it State-owned enterprises, urban councils and any other associated institutions — is the biggest procurer.
On the other hand, gross industry revenues are relatively lower.
This, therefore, makes it incumbent for Government to address these leakages in order to spur economic growth.
The 2020 Budget presented by Finance and Economic Development Minister Professor Mthuli Ncube prioritises growth, productivity, job creation, competitiveness and sustainable development.
These can all be achieved through implementing the Local Content Policy.
It, therefore, becomes important to come up with procurement regulations that guide the State and related institutions to comply with the strategy.
Opportunities for job creation, through State procurement, range from services to supplying consumables.
Large amounts of money are currently being spent on items such as stationery, cleaning materials and foodstuffs for the police, prisons, the armed forces, hospitals, schools, etcetera.
Other items being procured include uniforms, which can benefit the local textile sector.
Other goods include electric power meters, water meters, electric cables, communication cables and even communication handsets.
We also have consultancy services and water purification chemicals.
The country is presently beefing up its public transport system with new buses, and this is an opportunity to boost the local vehicle assembly industry which has the potential to create thousands of jobs through both upstream and downstream industries that supply tyres, bus seats, fuel filters, etcetera.
The State and related enterprises also spend significant resources on repairing and maintaining buildings and other types of infrastructure.
The Robert Gabriel Mugabe International Airport and the Hwange Thermal Power Station are currently being spruced up.
All these opportunities could have benefited the economy by prescribing a local content policy.
It is important to deliberately use local companies and suppliers for such projects.
There are many local companies that specialise in power generation and power distribution infrastructure. We have companies that can ably supply and maintain rail infrastructure, which includes rolling stock.
We should not forget hi-tech sectors such as the telecommunications sector, where an opportunity could have been missed to locally manufacture fibre optic cables given the quantities laid out throughout the country. This opportunity could have drawn Foreign Direct Investment (FDI) into the Special Economic Zones (SEZs) — some company could have invested for the local supply of fibre optic cables for use in Zimbabwe.
Any expenditure is an opportunity for job creation.
In terms of imports, telecommunications equipment is one of the largest expenditure lines in this economy.
It is, thus important to work with high-tech companies to see how local suppliers can be developed.
We can learn from the South African model, where local content is implemented as part of an accord signed between social partners, including Proudly South Africa, which is a “buy local” campaign. The SA government made a commitment to grow local supplies to 75 percent.
They also have an implementation framework which spells out products designated for local procurement. In addition, they have a method for calculating and measuring local content, as well as a monitoring and evaluation process.
The implementation framework includes local content thresholds in tenders for procurement of designated goods. These ensure that local content on processed tenders can be checked and verified.
Locally, performance evaluation for those in charge of procuring should include an assessment of how they would have implemented the local content policy.
The local content policy should also apply to Government projects that are foreign funded.
That way, the multiplier benefits of these infrastructure projects will also accrue to our country.
The country supplying products to Zimbabwe or the funding country benefits from the interest earned from the loan extended to Zimbabwe.
Most importantly, there is scope to immensely benefit from import substitution in the mining sector or resource-based industrialisation.
Sifelani Jabangwe is the immediate-past president of the Confederation of Zimbabwe Industries (CZI), the country’s biggest industry representative group.
