The Sunday Mail
Hon Mike Bimha
Two weeks ago, I briefed Cabinet on the status of our industry for the period October 2015 to March 31, 2016. The report shows that though we have challenges, there are a lot of positives in the manufacturing and industrial sectors.
Contrary to some pronouncements, there is no crisis; we are actually improving!
Yes, we still have challenges here and there in our manufacturing sector, and some of those challenges include, for instance, the effects of drought on raw materials and agro-processing.
Most industries that are dependent on agriculture and mining have suffered.
There is also the rand depreciation against the United States dollar, which has South African products on average becoming almost 15 percent cheaper.
When imports are cheaper, our products are less competitive, especially as the imports we bring into Zimbabwe are mainly finished products.
The other issue is utility and infrastructure gaps. Once you have these gaps, it leads to increased costs of doing business.
We also have an influx of cheap imports due to smuggling aided by the porosity of some of our borders.
Mitigation
One of the things we are doing in this regard is supporting local industry by managing imports.
This has been done through a number of Statutory Instruments that have already been gazetted to remove a number of products from the Open General Import Licence.
If a product is removed from the Open General Import Licence, one will have to get an import licence if he/she wants to import.
And before one gets that licence, we have to be satisfied that the targeted product is not available locally. There are items like clothes and shoes, blankets, sugar and cooking oil, among others. Another measure is resource mobilisation; putting out money for industry.
We still have the Distressed and Marginalised Areas Fund, Zimbabwe Economic Trade Revival Facility and a Reserve Bank of Zimbabwe fund that targets various sectors and companies.
In addition, we get money from Africa Development Bank for certain sectors, and have submitted projects under the US$60 billion China facility for Africa. These projects include Sunway City Hitech, Sunway City Medical Park and a motor vehicle assembly plant.
The Common Market for Eastern and Southern Africa also has a regional support mechanism that will facilitate a cotton and clothing strategy and another strategy for leather.
There will also be capacity building support for Government and quasi-Government institutions.
Government doesn’t operate in isolation.
As such, we are supporting the Buy Zimbabwe Campaign, and the ministry will soon carry out retail surveys to determine to what extent our retail outlets are balancing imports and locally-produced products.
Our teams will assess whether it is necessary to have certain imports or not.
This assessment will help us gather information for potential investors pertaining to what areas are best to invest in.
We also have measures relating to ease of doing business
Agro-processing
Cairns Foods Limited has invested in a new factory in Mutare which was commissioned on March 31, 2016. This is going to increase capacity utilisation from 15 percent to 80 percent.
To date, well over 100 people have been recruited in the last quarter as a result of that.
Furthermore, the company launched an outgrowers scheme which will benefit almost 1 760 farmers in Manicaland province.
There is also Associated Foods of Zimbabwe; it’s in the processing of peanut butter and jam. Capacity utilisation is expected to increase from 49 percent to 65 percent by year-end.
The company envisages introducing a small scale outgrowers scheme for groundnuts worth US$500 000. This is expected to benefit 1 000 families in the next three years.
Nestle has commissioned a new plant from the production of milk powders and Cremora. The upgrade will see Cremora output increasing from 6 000 tonnes to 8 000 tonnes per annum.
We have a company called Surface Wilmer whose recent capital injection has improved capacity utilisation for cooking production to around 100 percent thus producing a total of 5 000 tonnes a month. The company will be commissioning oil refinery equipment in May as well as a new packaging plant for cooking oil.
There is a group called Willowton Group, which was approved in 2015 and is in the process of setting up a cooking oil processing and soap manufacturing plant in Mutare. Equipment has so far been procured.
United Refineries Limited in Bulawayo is now averaging 90 percent capacity production.
There is also a new joint venture company called Lessaffre comprising the French and Anchor Yeast of Gweru. They are looking at production of Anchor Yeast not only for Zimbabwe but for Africa.
There is also Trade Kings Zambia which will establish detergent manufacturing plants for both soap powder and paste in Harare.
Delta Beverages commissioned a second line of Maheu Plant, employing 147 workers in December 2015. The plant is currently operating at 65 percent capacity utilisation and has capacity to supply the region in future.
There is also a company called Best Food Processors, a joint venture between Beitbridge Juicing Company and Arda.
It is involved in the processing of tomatoes, citrus and passion fruits and is in Norton.
More than 100 people are expected to be employed directly and over 3 000 farmers are set to benefit indirectly.
Chemicals and plastics
Sinoma – a joint venture company between the Industrial Development Corporation and Sino Cement Zimbabwe – will diversify into brick and tile manufacturing.
It is set to be commissioned this year.
PPC Zimbabwe is currently constructing a cement milling plant in Harare which is expected to be commissioned during the last quarter of 2016.
Sino Zimbabwe, which produces cement in the Midlands through its investment in early 2016, has increased its capacity to 80 percent.
ZimPhos also secured a US$10 million loan which will be used both for Dorowa and buying equipment for the plant and part of it will go to Msasa to rebuild the sulphuric phosphoric acid plants.
Prior to securing this funding, Dorowa was operating at 15 percent capacity. As a result of this funding, it’s now operating at full capacity.
Motor industry
Quest Motor Corporation intends to introduce new brands. Early this year, the company invested in kits and jigs. Capacity utilisation has increased from three percent to 12 percent.
Deven Engineering and Uton of China signed an agreement worth US$15 million in 2015 for bus assembly. They are expected to make another capital injection on the importation of completely knocked down kits which will increase capacity utilisation from 1 percent to around 15 percent.
Electricals and metals
We have SanZim, a local version of Samsung. They have set up a television and refrigerator manufacturing plant, and will also set up an engineering academy.
Setwave Technologies is a company which intends to set up a geyser manufacturing plant in Zimbabwe, with capacity to produce one million vacuum tubes, 500 000 heaters and 100 water heater stands.
Zimasco stopped operating in October 2015, but has managed to court a South African-based investor, Portnex, under a lease agreement for its five furnaces.
Buy Zimbabwe
A Chinese company will join Government in resuscitating Caps Holdings; they should be coming on board soon.
Archer and Paramount, which had really gone down, but are now up, are in the process of revitalising their factories.
The new operations have resulted in capacity utilisation rising to 17 percent.
The interesting thing is that because of the measures we are taking to manage our imports, some of the suppliers and manufacturers from South Africa, for example, who have seen that, have taken the step to come here and invest into local industries.
There are quite a number of them.
These sectors that I have spoken about don’t represent all sectors of manufacturing. They just represent those that we picked.
But those that we picked are also in various categories, and are not the only ones.
The recommendations that we made are that we are going to work on two main issues. The first issue is managing imports.
We are not just talking of protecting our industries, but promoting them by making sure that the companies in certain fields make progress.
For example, we are going to expect companies that we are protecting to perform and reduce prices so that they become competitive.
The second issue is local procurement.
This means Government and the private sector should have a habit of procuring from our own. We had manufacturers telling us that if Government alone was to procure from them, they would operate at 100 percent capacity.
◆ Honourable Mike Bimha is the Minister of Industry and Commerce. He shared these views with The Sunday Mail Chief Reporter Kuda Bwititi in Harare last week.
