adminMorris Mkwate
The Buy Zimbabwe initiative will on Wednesday convene a conference where leaders in the manufacturing sector will meet their counterparts in the retail sector to discuss issues of pricing of basic commodities. Sunday Mail News Editor Morris Mkwate (MM) talks to Buy Zimbabwe Campaign Business Development Executive Mr Alois Burutsa (AB) on this and other issues
MM: Mr Burutsa, next week on October 23 the Buy Zimbabwe and the Retailers Association of Zimbabwe are jointly hosting the Buy Zimbabwe Retail Supply Conference, what are the objectives of this event?
AB: Basically, what has been happening is that as we are going around with Buy Zimbabwe initiative, a lot of people in the manufacturing sector are saying to us, ‘you guys are saying Buy Zimbabwe but if we go into the shops, if we go into OK, if we go into Food World you find there is a huge import content on the shelves and a lot of products that are imported and so how can you guys be saying Buy Zimbabwe when we are seeing a dominance of imported products on the shelves?’
And then when you go to the retailers and you say to the retailers; ‘gentleman, why are you not supporting the local industry’? The retail sector will say, ‘but your guys are not supplying us. We are giving them orders but they do not supply the order, they don’t meet our demand.’ They always cite examples such as Cairns Foods. Basically you then end up with a situation whereby the retailers and suppliers are not happy with each other. So we said let’s bring them together and let’s talk about this, let’s come up with a situation like we have in South Africa.
If you go into Zambia, Malawi their retailers out there are predominately fuelled by South African products. That is the situation we would not want to see here in Zimbabwe whereby if you walk into any of those retailers you see a dominance of our own local products. So that is basically why we are saying we are bringing local manufacturer and retailers together so that we come up with a way forward. So that Morris when you walk into one of those shops you will be greeted by local products. That is exactly what we are trying to achieve.
MM: Mr Burutsa, even though our products are little more expensive as Zimbabweans, should we pay the price so that we can retool ourselves, pay the price for a period? What is your take on that?
AB: First and foremost as Buy Zimbabwe we are not advocating blind adherence to local products. We need to make that very clear. As Buy Zimbabwe we are a competitiveness driver.
We are not promoting mediocrity, we are not saying as long as it is a Zimbabwean product no matter how bad it is just buy it. No, that’s not what we are saying. We are saying to the local manufacturers, you need to improve on your quality. We are not just looking at the Zimbabwean market. Zimbabwe is just a population of 14 million but you have a whole Sadc region going beyond where you can actually be supplying as well but starting off here.
But you cannot go to the region when your quality is bad. So you need to work on your quality. Secondly, work on your pricing, it is very important that you are competitive. We need to look at import parity.
“How much does the yeast cost if the products were to come in? Right now we need to be honest with ourselves, the South African manufacturer does not face as much problems as the Zimbabwean manufacturer. For instance, right now we have a huge problem with electricity.
Local manufacturers’ plants are running on generators and using a lot of fuel which the South African manufacturer does not have to face up to.
Secondly, their equipment is obsolete and with obsolete machinery what it means basically is that your efficiency is very poor. If your efficiency is very poor your output is very low.
And if your output is low, your costs are high and will then ultimately translate into a higher price.
But we are saying let us look from a policy direction to then say how do we help local manufacturers because we do not want the consumer to suffer as well. So what we are advocating is to say let us help the local industry re-tool and get up on its feet.
But how do we help them? We hold up their hand and give them some advantage over the imported product for a period to allow them to get back on their feet then they will be able to compete on a level playing field because at this particular moment it is not a level playing field. We honestly cannot expect local manufacturers to compete with South African manufacturing companies. It is just not possible.
MM: Mr Burutsa, you are the one that has sought to bring these two groups under the same roof to discuss pricing issues, manufacturing issues and all the issues relating to retail. Do you think in your view that the conference will have effective means, the effective conduit through which a difference will be made in cementing the relationship between local manufacturers and retailers?
AB: Absolutely what seems to have been happening is that one group is speaking with one voice on the other side of the table and the other group is speaking with another voice on the other side.
And we basically said let us just bring all local manufacturers and retailers together. And this conference, the way we are structuring it, we are structuring it in such a way that we want to come up with concrete solutions on the way forward.
It is going to be a conference where there is going to be a lot of candour. We want to try to be as candid as possible to each other. The whole idea is to come up with a workable solution. So that going forward when you walk into a supermarket the amount of shelf space that the local manufacturers are going to get as opposed to the imports should tell you a story.
We want the local manufacturers to get more shelf space. We want to say, ‘look guys, if I walk into any of these retail sectors without even a doubt you just say you know what, I’m in a Zimbabwean shop because I’m being greeted by local products’.
Not this current situation whereby you walk into a shop and the first thing that hits you are imported products, all over even the advertising, even the banners and everything it’s all imported products and you think am I in Zimbabwe or South Africa?
So we want all that to change and we believe that this conference here will lay that foundation and platform from which we will then springboard going forward and we see major turnaround in what has been happening currently.
MM: Why is the price of local goods still higher compared to the imports even after shipping and payment of duty? How do you explain that?
AB: It is a question of economies of scale. South African companies have got a market of about 52 million people. They go as far as DRC, Kenya and many other countries which means that their capacity utilisation is very high and they produce their goods in bulk. If you produce in very high quantities then costs per unit are reduced significantly.
Locally our machinery is obsolete, efficiencies are very low and production is low as well, which leads to high costs. Companies in SA have high efficiencies and produce 24 hours a day. Most companies here have closed because they do not have electricity, raw materials have run out and they do not have working capital. Ultimately they are losing money and that will translate into higher prices.
If Zimbabwean companies are able to have access to the same machinery, same working capital and same markets, the prices will come right and that is what we are saying as Buy Zimbabwe. If we start supporting our own local manufacturing industry we will get to that level. The South Africans got to that level because they put in place the Proudly South African campaign. A research was done and 86 percent of South Africans right now consciously choose South African products when they go into the shop.
They know that if they buy their own they are creating jobs for their relatives and bringing in money into their own fiscus. As Zimbabweans we should move away from this issue of supporting imported products at the expense of locally produced goods.
There is a bigger cost to pay if industries continue closing the way they are right now. We are going to have a huge economic cost. The unemployment is going to be very high, the retailers are going to close shop because they will have no market. They are all going to close down at a much bigger cost and I hate to even imagine what will begin to happen.
I think we rather pay that extra little US$0,50 or US$1,00 today so that we correct our future. As long as we continue on this path right now I can assure you we are going one way and that is downwards.
MM: How do we change consumer perception because some people believe that South African and foreign products are better than our own locally produced products?
AB: As Buy Zimbabwe we are a competitiveness driver but we are also saying for a similar quality product if it has a slightly higher price go for it and buy it because you are creating employment for future generations.
We have to look at the bigger picture and not think about today only or we will end up being like other countries that are just basically flea markets and there is no manufacturing to talk about. If you go into our markets there is 50 percent local tomato sauce and 50 percent imported tomato sauce, yet we produce good quality tomato sauce. Is that imported tomato sauce going to make a huge difference on your plate?
Why are we importing something such as tomato sauce when local manufacturers are producing enough tomato sauce to meet market demand?
If you go into the statistics to see how much is spent on a simple product like tomato sauce you will be shocked. Yet that money can be used to re-tool our local tomato sauce manufacturing companies.
Revamping local industries means more employment creation and more employment creation means more output to the retailer and more output means more customers — it’s a win-win situation all round.
MM: Do you think the Buy Zimbabwe Campaign is making a difference in improving the relationship between the retail and manufacturing sectors? Are you not just a voice in the wilderness?
AB: We are making a huge difference. The trade policy that was launched last year is a result of such efforts.
Online Reporter
Great post.