adminCarter Mavhiza Business Correspondent
RECENTLY I spent a few hours at the long distance bus stop near the roundabout or “Kumbudzi” close to Boka Tobacco Auction Floors.
This is the main terminus where people heading to Masvingo and as far as South Africa catch buses, cars or even haulage trucks.
As I stood there my heart bled as I could not help but notice the large number of buses and trucks laden with cooking oil, refrigerators, boxes upon boxes of laundry soap, comforters and a vast array of other products imported from South Africa and destined for different parts of the country.
I also saw a good number of second-hand cars with chalk-inscribed windscreens and temporary number plates that were also coming into the city.
What also struck me was that those travelling in the opposite direction comprised of women with handbags and men clutching empty travelling bags while buses and trucks were not carrying any goods.
What I saw aptly portrays the state of our economy and particularly that of the manufacturing sector.
We are slowly drifting into a nation of importers and unless we take remedial actions we will end up with no industry to talk about.
That will be a very sad day for a country with so much intellect and a literacy rate that is next to none in Africa.
Why are we not producing in our industries to match the aggregate demand for consumables?
If we successfully hosted the UNWTO we indeed have the executive capability to calibrate our economic model and squarely pivot our economic turnaround on value addition.
Executive capability in the area of business is abundant as evidenced by our capacity to host agricultural shows, trade fairs and mining expos among other forums year in and year out.
We need to ensure that our economy is hinged on secondary production (value addition) through enhancing production in agriculture and mining.
Limited efforts in value addition are currently hampering the growth of agriculture because farmers are earning very little from their produce which is being sold in raw form.
We, therefore, need a metamorphosis to unlock value and overcome our challenges as a landlocked country in Southern Africa.
If we move with the same eagerness and alacrity that is manifested in the numerous business seminars and development workshops that are being held throughout the country every week we will be able to turnaround our fortunes quickly.
What we need now beyond the negotiating forums and ever crafting of blueprints is actual action and actual implementation.
Wisdom is justified by her children and likewise we have to justify our literacy level by breathing life into our industry through value addition.
There is no doubt that we have very capable leadership at national level and on the business front but we all need to put our hands to the plough and get on with the job.
We need to start delivering, actions speak louder than words. Future generations will judge us on what we will accomplish during the next five years.
We have been crying about lack of liquidity in the economy yet we are exporting million if not billion in United States dollars and South African rands to neighbouring South Africa daily. We are literally kicking the can down the road worsening our own situation by mopping up the United States dollars and rand in circulation and offloading them in South Africa.
Imagine what will happen if all the million of rands we are spending on buying boxes of cooking oil, soap and margarine were being spent on buying Olivine Industries products.
What will happen to its capacity? How many jobs will be created and will this not increase consumer demand?
Liquidity was not going to a major economic challenge because all that money will be circulating in our economy.
What will happen if the thousands of dollars that are being sent via electronic transfers to Japan and South Africa not forgetting hard cash leaving for Tanzania and Walvis Bay was being paid in instalments to our local car assembling firms.
This will indeed be a very liquid economy! I am not against cross-border trading but we have to sober up to the impact that this is having on our economy.
Yes, local industry is not doing well but who is supposed to rectify the situation beside us Zimbabwe? If we do not instil confidence in our own products then who will?
I have heard most people saying that we cannot promote the Buy Zimbabwe campaign because there are no products to start with but we have companies that are producing something let us start with those. They say charity begins at home.
It will be folly to expect non-Zimbabweans to turn grow our economy for us, we have to do our part and then they can come in. Let’s demonstrate our commitment to ensuring growth in our economy it is ours. Let’s claim ownership.
We also need to ramp up our tertiary production which is characterised by services such as banking, insurance, security, marketing and other services.
This level of production relies heavily on primary and secondary production. Riding on knowledge that secondary production has output value that surpasses primary production in monetary terms, the success of the tertiary sector is inextricably interwoven in the concept of value addition.
The more the economy realises from secondary production the greater the chances of success in the insurance, banking, marketing and other support services.
Secondary production is the hub of any economy. Primary and secondary production pivots upon the growth of this sector.
Resuscitation of processing and manufacturing industries will solve many of our challenges. If the value of output in the value addition chain increases, the trajectory will be the flow of funds into primary production and mainly agriculture and mining.
For instance, if we realise US$1,5 billion from the processing of tobacco and cigarette making it would be easier for the firms to set aside US$0,5 billion and inject it into agriculture because their earnings are tied to the output from the farms.
We have to inject funds into the mainline production industries which are the key drivers of value addition. The major reason why some of the efforts have not yielded the much needed results is the absence of credit monitoring. Are the funds being channelled by financial intermediaries on behalf of Government supported by a strong and water tight monitoring mechanism?
There is need to ensure that the funds used for the specific purpose that they are being lend for. Our paradigm shift should also focus on the promulgation of an efficient credit monitoring policy. If funds are meant for the acquisition of raw materials there must be tracking of the use of funds and the entire procurement process to ensure that materials are procured at economic prices so that locally produced goods will not cost more than imports.
This concept of locally produced goods costing more than imports is a threat to value addition. Credit monitoring is one of the solutions that can be adopted. On the other hand, credit monitoring will ensure that a revolving fund will indeed remain a revolving fund as all borrowers repay into the fund.
We cannot ignore the fact that as Africa we have lost our status as net exporters of agricultural products due to the fall in prices of raw commodities.
Nature is one of the causes because weather-related damages have hit rice crops in Benin and Cameroon while, on the other hand, Egypt’s cassava exports have been hit by viruses affecting the crops.
The new era for Africa and indeed Zimbabwe lies in value addition of domestic output.
Carter Mavhiza is a graduate in Finance and Banking from the University of Zimbabwe and an ICSAZ student. Email: vhizworks @gmail.com
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