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Nkosikhona Ndlovu
THIS article is a continuation of the one that I wrote last week as part of commemorating Bulawayo’s 125 years by looking at what made the city tick, what has gone wrong with a view to rebuilding the lost pride of the Bulawayo of yesteryear. In this instalment we will look at the industry that employed most people in Bulawayo, that is textiles industry.
Evolution and growth of textile and leather industries
The origins of textile and clothing sector came because of the Government looking for other opportunities for revenue since they realised that they were not getting much from mineral deposits as they had found in South Africa. There was establishment of the Cotton Research Industry Board (Crib) and three ginneries that were established in Kadoma.
The first spinning machine was constructed in 1941. The sector grew and companies started exporting to South Africa and a bilateral trade agreement was signed between the two countries in 1948. The growth of the sector during this period could be attributed to tariff and quota restrictions, export and investment promotion schemes, and Bulawayo’s central location in the Southern Africa region, new infrastructure and educated labour. When the Federation of Rhodesia and Nyasaland involving Nyasaland (Malawi), Northern Rhodesia (Zambia) and Southern Rhodesia (Zimbabwe) was established in 1953, this accelerated the process of industrialisation, with much of the investment going to Southern Rhodesia.
The collapse of the Federation in 1963 was followed by the Unilateral Declaration of Independence (UDI) by the minority white regime in Rhodesia, which resulted in the imposition of sanctions by the international community. This ushered in a new era of inward-looking Import Substitution Industrialisation (ISI) and an intensive process of industrialisation where the State played a central role in resource allocation.
A centralised foreign exchange allocation system was introduced, with an elaborate system of State Enterprises and price controls. This foreign exchange rationing benefited the companies that were in existence in the late 1960s, undermining new and especially small enterprise growth. However, the state machinery operated in close consultation with the predominantly white private sector.
The 1964 bilateral agreement with South Africa provided a basis for sanction-busting and the generation of the much-needed foreign currency. Whereas the manufacturing sector accounted for 17 percent of GDP in 1965, its share had grown to 25 percent by the advent of independence in 1980. This was exceptional by sub-Saharan African standards. While the share of manufacturing output in GDP in Zimbabwe averaged 23,3 percent of GDP during the period 1980-89, the corresponding figure for sub-Saharan Africa was only 10,4 percent.
According to Sachikonye (1999), by 1987 the manufacturing sector was the second largest employer of labour with a total number of 175 000 people being employed in the sector representing 16 percent of the labour force in the formal sector.
Investment in textiles post-1980
The fortunes of the manufacturing sector have been closely tied to the prevailing investment and fiscal regimes in the country.
Prior to Esap, there was extensive State intervention through a variety of fiscal and investment controls, including the forex allocation system. The scarcity of forex (dating back to the UDI years) hampered investment and the renovation of capital stock during much of the 1980s.
Investment levels peaked in 1974-1975 before taking a downward slide in the 1980s. Estimates indicated that investment levels over the period 1974-1982 were inadequate to cover the depreciation of equipment. For instance, out of three sub-sectors studied by a World Bank mission in the mid-1980s, textile had the biggest investment rate since independence while neither the steel nor fertiliser sub-sectors had undertaken major investments since the mid-1970s.
Yet even in that relatively modernising textile sub-sector, the spinning equipment was on average 20 years old while looms were about 16 years old (World Bank, 1987). More generally, up to the mid-1980s, Zimbabwe had witnessed a total gross inflow of foreign investment amounting to less than US$50 million.
However, with specific reference to the manufacturing sector, there has been little quantification of sub-sectorial investment trends and requirements, including an estimation of the aggregate investment required for the sector. Some estimates posited that manufacturing investment would have needed a minimum of Z$584million a year between 1988 and 1990, compared with an average of Z$185 million in the first half of the 1980s.
De-industrialisation sets in
There was an initially favourable response by domestic firms to the early liberalisation exercise undertaken in 1990-1991.
There was a considerable amount of investment by domestic firms before the fiscal regime became tough from 1992 onwards. A greater proportion of this investment consisted of the refurbishment of plants, typically the replacement of old equipment by modern plant as well as expansion of capacity. Firm-level evidence suggested a notable trend toward re-equipment at least in the first two years of adjustment. This was prior to the escalation of interest rates which made borrowing and loan servicing extremely expensive.
To be continued next week
-Nkosi Ndlovu can be contacted on 0747834432 /0843022972.
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