adminNgoni Dapira Business Correspondent
DESPITE dollarisation, the country’s manufacturing industry still finds itself on the decline due to a number of internal and external factors. Industrialists have over the years cited many challenges contributing to this decline and one of the identified ways of addressing the decline is the Buy Zimbabwe campaign.
Economists say 70 percent of the costs of business are on procurement, arguing that in developed economies they have sound procurement policies that dovetail with local industry expectations to boost economic growth.
However, this has not been the case in Zimbabwe. Despite several efforts by Government to revive some key manufacturing industry with fresh capital injection, the procurement loophole has found many of the companies struggling to stay afloat because of excessive competition from cheap imports.
This year, however, according to the Zimbabwe National Statistics Agency, in January alone Zimbabweans imported goods worth $400 million compared to $482 million in December last year.
The trend indicates a 17.3 percent drop in the monthly import bill. Exports were at $249 million compared with $220 million for December 2015 reflecting an 11.64 percent gain.
Confederation of Zimbabwe Industries Manicaland chairman, Mr Richard Chiwandire, attributed the positive development to the ongoing Buy Zimbabwe drive and Government’s continued efforts to introduce a raft of measures to reduce the import bill and close in on smuggling of cheap sub-standard imports through the country’s porous borders.
Mr Chiwandire added that regardless of Zimbabwe being a signatory to regional trade agreements, in past years other countries like South Africa had introduced conflicting internal trade policies like its 2012 75 percent procurement accord which was ratified in line with the country’s Preferential Procurement Policy Framework Act of 2000 meant to support its local industry, urging Government to consider the same.
Apart from the headache of capital constraints industry is failing to remain competitive against cheap imports.
According to the 2015 CZI manufacturing sector survey on business viability, 46 percent indicated that business has not been viable in 2015 compared to 54 percent in the previous year.
Profit plough back remains the largest source of financing of new capital reflecting that the current economic environment remains largely deterrent to FDI.
“This is showing an improvement in business for local manufacturers, but we are saying it is not enough. In America or Britain consumers support locally manufactured products and we are driving for the same conception. However, to local manufacturers this should not be reason to force sub-standard products on consumers. We need quality goods and pricing has to be addressed,” said Mr Chiwandire.
Speaking at the third edition of the Buy Zimbabwe Supply Chain Conference, Buy Zimbabwe chief executive officer, Mr Munyaradzi Hwengwere, said the country needed to invest where it had the greatest value.
In an interview on Tuesday, he said there should be a 50 percent local procurement policy to boost local industry.
“We should have a minimum threshold of 50 percent and above of buying locally. We should invest where we have the greatest value and build on that. The major challenges affecting the economy remain unchanged, suggesting that little has been done to address such issues or the economy has approached a rock in terms of responding to domestic stimulation,’’ he said.
‘’This is why industry, retailers and consumers have to understand the importance of the Buy Zimbabwe initiative to address our economic problems triggering high unemployment and company closures in the country,” said Mr Hwengwere.
He added that retailers and manufacturers should create awareness of their products and services by interacting with communities to try and promote local industries.
According to a snap survey
conducted by Buy Zimbabwe, the reason why there was lack of knowledge of local brands was because 99 percent of the people sent to talk
to the communities were merchandisers, not manufacturers themselves.
“At least 99 percent of people who are asked to speak to communities are merchandisers. So you have all the community leaders, all the buying brands and you request simply for local manufacturers who are the biggest beneficiaries to engage with these communities, but do not find a single manufacturer there,” Mr Hwengwere said.
Cairns Foods operations manager and CZI Manicaland vice-chairman, Mr Joseph Mavhu, said with the imports that were flooding the local markets, emphasis should be on value addition and local production to create jobs locally rather than relying on cheap imports thereby creating jobs for other countries.
“Imported products have flooded the local market pushing out locally-produced goods. This has seen the economy spending more on imports and getting less on exports further worsening the trade deficit.
“However, the sad reality is that the economy remains fragile, notwithstanding significant positive gains realised in the improvement in the supply of goods and services by local industry. This is what the Buy Zimbabwe campaign intends to redress, requiring the understanding and input of every Zimbabwean,” said Mr Mavhu.
Recently Cairns Foods re-launched its pea bean out-grower programme coupled with the rebranding launch of its signature Cashel Valley baked beans range.
Mr Mavhu said nearly $700 000 that was being used in the importation of its breakfast beans will now be contained in the country following the re-launch of the programme an initiative he said would propel the ongoing Buy Zimbabwe drive and help reduce the country’s import bill.
Cairns is expecting approximately 1 100 households to benefit from the scheme in Manicaland alone, with 660 more benefiting in the rest of the country.
“As Cairns, Pea beans are an essential raw material for our Cashel Valley baked beans range. We have decided to empower our local farmers and circulate money within the country rather than to import the pea beans,” said Mr Mavhu.
End of last year capacity utilisation dropped by 2,2 percent to 34,3 percent in 2015 from 36,5. Capacity utilisation is the percentage of a firm’s total possible production capacity that is actually being used.
Thus, it refers to the relationship between actual output that is actually produced with the installed equipment, and the potential output which “could” be produced if capacity was fully used.
Several local companies in the manufacturing sector like Quest Motors which has since launched turnaround revival strategies have been crying for the local market to understand the importance of buying locally produced products to create jobs locally and help boost the economy.
Although retailers and consumers have argued about the high pricing of locally manufactured goods, while industrialists complain about the high cost of doing business in the country, this is expected to be addressed by the recent creation of the National Competitiveness Commission which will facilitate for an improved competitive environment for business in the economy.
However, while the manufacturing sector is facing challenges due to competition from cheap imports, unavailability of funds for retooling, low consumer demand and high production costs, CZI said specific sectors that have received interventions such as temporary tariffs and import licenses which are regulated together with industrialists have started to yield positive results.
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