The Sunday Mail
Hon Chiratidzo Mabuwa —
The import management programme is implemented through the removal of certain targeted products from the Open General Import Licence.
The implication is that goods removed from the OGIL will require an import licence when being imported into the country. The measure does not ban importation, but limits the quantity of imports coming into the country. Import licences will only be issued to cover the gap where local production is not adequate to cover demand.
In pursuance of the foregoing, Government has come up with a cocktail of policy measures aimed at the resuscitation of local industry, the latest being SI 64 of 2016. The gazetting of SI 64 of 2016 in June 2016 saw the removal of 43 products from the Open General Import Licence. This measure has already begun to yield positive results in the local industry.
Subsequent to that, the Ministry of Industry and Commerce has set up a Monitoring and Evaluation Committee to assess industry’s efficiencies. Through Government-initiated and private sector-supported import substitution efforts, some industries have managed to boost their capacities.
The Confederation of Zimbabwe Industries’ Manufacturing Sector Survey for 2016 indicated an increase in capacity utilisation from 34,3 percent in 2015 to 47,4 percent in 2016. The following sector-specific gains have been realised to date:
◆ The cooking oil industry is now operating at an average of 90 percent;
◆ The yeast industry, which was almost closed, is now at 83 percent;
◆ Biscuit manufacturing has gone up from 35 percent to around 75 percent;
◆ The furniture sector improved capacity from 45 percent to 70 percent;
◆ The detergent industry has moved from around 30 percent to 60 percent;
◆ The cement manufacturing sector has invested nearly US$200 million in new plant and equipment;
◆ The dairy sector mobilised US$746 000 and out of that, about US$520 000 was used to purchase 400 heifers in September 2016 to boost local raw milk production under the Dairy Industry Revitalisation Fund.
◆ Tyre manufacturers have increased their capacity utilisation from 30 percent to 50 percent following the control on the importation of second-hand tyres.
It is hoped that the above momentum continues. For specific companies, the success stories are as follows:
Tregers Group, which manufactures plastics and other steel products, has so far realised an increase in both employment and production capacities from 2 006 to 2 172 and 35 percent to 45 percent, respectively, with the plastic division currently operating at 80 percent.
The company’s divisions, Monarch Windows and Kango Divisions, have since recalled their workers. Splash Tiling Solutions is a Zimbabwean company specialising in the manufacturing of a number of tiling products such as grout, tylon adhesives, and plastic products for plumbing as well as a variety of paints.
The company employs 80 workers of whom about 40 are permanent. The company has two factories in Harare, Workington where grout, tylon, porcelain and standard adhesives are manufactured. The Workington factory also houses the manufacturing of plastic products such as pvc pipes as well as plumbing material.
The factory in Graniteside specialises in paint. The company is sitting on huge piles of stocks to the extent that production has since been stopped as the company no longer has storage space. The company has imported state-of-the-art equipment which will see improvements in quality and quantity of production. The equipment is scheduled for commissioning in a few months to come. Some pieces of the equipment have since arrived in the country.
The equipment is valued at US$106 000. Cost Timbers and Timber Products International manufacture various types of timber and furniture products. Statutory Instrument 64 of 2016 removed doors and other furniture products from the OGIL.
The company registered a moderate increase in demand for flush doors and other types. After gazetting of the SI and the subsequent implementation, demand for flush doors and other types ranges rose by around 15 percent.
KDV Bedding manufactures mattresses and other bedding products. Prior to the gazetting of SI 64 of 2016, the company’s capacity utilisation was at 65 percent and producing 2 700 units of mattresses per month.
They were employing 54 people and operating for five days before promulgation of SI 64. After the introduction of SI 64, it is now operating at around 80 percent capacity level and producing 3 500 units of mattresses per month.
The company’s employment has increased to 58 people and they are now operating six days a week to meet demand which has increased by about 35 percent.
The company has been running a 24 hours production plant since April and is still going strong. The company was nominated to receive the manufacturer of the year award by Buy Zimbabwe. This award recognizes a Buy Zimbabwe Partner for an outstanding performance in the manufacturing sector.
It recognises and promotes best practice and the important role of the manufacturing sector in Zimbabwe’s economy with regard to value addition and sustainable job creation.
Cairns Holdings Limited manufactures a wide range of products which are in the food and beverages sub-sectors. Some of these products were included in the recently-gazetted SI 64 of 2016, namely canned fruits, jams, potato chips, cereals and peanut butter.
To date, there has been a significant change in terms of demand for jam since there are no imported brands on the local market.
The jam line’s current capacity utilisation is at 50 percent. For the other products namely, potato chips, baked beans and canned fruits there is no change in demand since the market is still flooded with the imported competitor products.
Currently, 130 people are employed at the Mutare factory, a decline from 150 who had been employed in March when increase in capacity utilisation was anticipated. The 20 contract workers laid off are the ones who were manning the suspended production line.
Associated Foods (Pvt) Ltd/Zimbabwe Agro-Processors is located in the Border Streams area of Vumba. Associated Foods (Pvt) Ltd is a merger between Honeywood (Pvt) Ltd and Spread Valley (Pvt) Ltd.
Before the merger, Honey wood Enterprises (Pvt) Ltd was Zimbabwe’s leading producer of jams, canned fruits and tomato products, mainly under the “Farm Gold” brand for jam, and Spread Valley (Pvt) Ltd, the country’s leading producer of peanut butter, mainly under the “Mama’s” brand.
The company collects fresh fruit, pulps and preserves it in bulk and later on, even when fruits are out of season, they can the fruits and sell them under the brand name Farmgold. The canned fruits include mangoes, apples, guavas, pine apples and tomatoes.
The company also manufactures tomato paste or pizza base which is used as a spread when baking pizza but the product is proving difficult to sell on the local market.
The new peanut butter manufacturing machine worth US$400 000 started production in June 2016 and was procured through funding from Norfund (the Norwegian Investment Fund for Developing Countries) which invests in the establishment and development of profitable and sustainable enterprises in developing countries.
The new peanut butter machinery is currently producing one tonne of peanut butter per hour and running one 8 hour shift per day. Wallace Laboratories is a manufacturer of skin care products and household detergents. Currently, the company is producing laundry bar soap (Bymo & Superior brands).
It intends to re-launch 10 more products which it used to manufacture, before year-end. These include bleaches, dish washing liquid, toilet cleaner, camphor creams, body lotions, Dettol, agro-chemicals (Chirindamatura), toilet paper and also contract manufacturing of other household products.
Multiklean is into the manufacturing of detergents such as dish washing liquid (Bubble Brand), pine gel and tile cleaner. Recently, they introduced new products that include fabric softener, foam bath, degreaser, anti-freezer, radiator flash, tyre polish, car cleaning products and glue clean.
The company produces liquid and powder detergents and scouring powder. Its product range include: scouring powder, multi-purpose cleaner, water guard, dish washing liquid, thick bleach and washing powder. The company recently introduced a new product of washing liquid (Spotless) on the market through a subcontract with a Mauritian com- pany.
The company also invested in bottle blowing machinery as a measure to cut on cost of packaging and an automated packing line. Its total investment is about US$3 million and currently employs about 100 people.
Chitaitai: The company manufactures floor and shoe polish. The company recently acquired and installed an automated machine for manufacturing all its product range.
However, they are facing stiff competition from import which comes in illegal packing sizes. Some supermarkets such as OK Zimbabwe are taking long to accept the company’s products in preference of imported brands.
Datlabs is very much grateful for SI 64 which insulated it from competition emanating from imported products. Sales volumes have since gone up and capacity utilisation has edged up from 30 percent to 50 percent as of now on the camphor cream line but it is hoping to have reached 70 percent by year-end.
Prior to SI 64, the company was about to introduce a four working-day week and instigate salary cuts but these plans were not executed because of an upsurge in business. Prochem is a manufacturer of skin care products and household detergents.
The company has recorded an increase in both capacity utilisation and employment levels from 30 percent to 48 percent and 43 to 101 workers, respectively. Their products now occupy 50 percent of the shelf space as opposed to 10 percent before the SI.
This has also benefited downstream industries which includes the label suppliers (from 5 percent to 15 percent), plastic packaging suppliers (37 percent to 60 percent) and other local raw material suppliers (20 percent to 37 percent).
Chloride Zimbabwe, a subsidiary of ART Corporation, commissioned new technology of manufacturing lead acid batteries, worth US$3 million on September 29, 2016.
Production capacity is now at full level, (240 000-360 000 units per month), with 300 workers. Blue Track and Sensational, which are into the manufacturing of synthetic hair products, have since raised their employment levels from 150 to 450 and 400 to 600 workers, respectively.
Challenges in the implementation of S1 64 of 2016
Although some success stories have been recorded as a result of the SI 64 of 2016, as highlighted above, its implementation is not without its own challenges.
These challenges include:
- Trade-off between balancing existing employment within the retail and distribution outlets that import and protection of the local manufacturing industries.
- Delays in foreign currency allocations to the local manufacturers, undermines the opportunities being given by the SI.
iii. Liquidity crunch which is currently depressing general aggregate demand
- Continued appetite for imports by consumers, who still have preferences of imports over local products.
- Monopolistic behaviour by some local producers, hence resulting in increased prices.
- Poor quality and delayed de livery of goods by the local producers due to less competition from imports.
vii. Shortages of raw materials (soya and cotton seed) especially in the cooking oil industry.
viii. Incessant smuggling through the porous borders, resulting in black marketing.
Honourable Chiratidzo Mabuwa is the Deputy Minister of Industry and Commerce. She shared this information with The Sunday Mail’s Debra Matabvu in Harare on December 9, 2016.
