adminKudzanai Gerede
When Finance and Economic Planning Minister Patrick Chinamasa tabled the 2016 National Budget in Parliament last November, the tone for industrialists to resuscitate the country’s once beaming industries had been set.
The chief anchor to the minister’s vision was to see economic growth improvement spurred by increased productivity levels from the country’s industries as he proposed various interventions that propels re-industrialisation.
The country has haplessly witnessed most of its industries succumbing, following an epoch of economic restrictions imposed on the country by Western countries since the turn of the millennium leading to massive de-industrialisation as the economy struggled.
As such, Mutare, one of the country’s strategic industrial cities has been adversely affected by a series of company closures in the past decade and a half, as the city was at one time the heartbeat of economic prosperity, feeding on raw materials coming from its satellite communities mainly the abundant timber plantations and tea estates.
Mutare’s Nyakamete industrial site once vibrant with activity provided downstream industries, which complemented immediate communities’ economic activities through employment creation and value addition of raw materials to maximise on profits.
Lucrative industries like Mutare Board and Paper Mills as well as Hunyani, which used to be among Southern Africa’s major paper producers have since been shut down owing to operational challenges as the country’s economy took a nose dive.
Even in the years of economic recovery since 2009 when the country adopted the multi-currency system ending years of astronomical inflation, most of the country’s industries failed to resume operations while those that were recapitalised have struggled due to a host of multi-dimensional challenges.
Most industries in Mutare still use antiquated machinery which is very inefficient and costly to maintain in a competitive technological era where modern equipment is so efficient.
This has been compounded by erratic supply of electricity propelling businesses into additional costs as they try to secure other energy alternatives such as use of generators. The country’s now defunct railway, which used to connect strategic markets both locally and regionally for the city’s industrial input and output at cost effective freight cost has precipitated high cost of doing business in the country.
Economist Mr Kipson Gundani concur that competitiveness issues have been the major barrier for most industries and alludes to serious contemplation on cost structures so as to arrest cost drivers if local industry can compete locally and regionally.
“Any meaningful attempt to revive the manufacturing sector should look primarily at the key competitiveness drivers such as cost of money, electricity availability and affordability, transport and water,” he said.
Although industrial transformation of Mutare will have to be spearheaded by industrialists in the province and other like-minded business people, the onus is however on Government to create the prerequisite conditions for the facilitation of that much needed transformation.
In his budget presentation Minister Chinamasa made great interventions towards boosting and resuscitating the country’s industries.
The minister’s introduction of rebate of duty on capital equipment imported by mining, agriculture, manufacturing and energy sectors for equipment valued at US$ 1 million and above will boost the retooling exercise by most firms in the province as the need for modern equipment is crucial than ever before.
Gundani says there is also a need to deliberately create markets for local goods through use of several Government policy instruments and inward oriented procurement practices.
In September last year Zimbabwe Revenue Authority Commissioner General Mr Gershem Pasi revealed Government’s proposed Industry Resuscitation Plan which aimed at making statutory arms of Government such as the Air Force, Zimbabwe Defence Forces, Zimbabwe Republic Police and parastatals to procure vehicles only from local assemblers.
In this respect, local motor assemblers like Mutare’s Quest Motor Corporation should start seriously considering its capacity levels to cater for Government vehicles and continue to lobby for the immediate enforcement of the proposed plan.
While the proposed interventions are being put in place, industrialists have argued that unavailability of massive capital injection to revamp the fallen industries mainly in the Nyakamete industrial area which is now a shadow of its former self poses a threat to any transformation expectations.
“The greatest impediment is lack of capital to reinstate those once thriving industries. There is need to source for Foreign Direct Investment to finance industry and it does not take much to do that as investors are always in search of profitable areas to place their money on. The Government needs to create a conducive environment which encourages investors to come and invest,” Pepukai Chivore noted.
The resuscitation of Mutare’s timber industries has to be synchronised with the revamping of its timber plantations to create coherence in the business ecosystem. Investment into the strategic sectors of energy and transport can go a long way in paving way for the resuscitation of the manufacturing industry in Mutare.
Manicaland has been looking for answers to avert energy shortage challenges from elsewhere when the answer lies within its confines.
Last year Middle Sabi Farmers Association president Mr Martin Munodawafa decried the shortage of electricity in Manicaland citing that the province had the capacity to generate its own electricity if investment and government intervention to negotiate the debt impasse between them (Middle Sabi farmers), ZINWA and ZESA which has forced the farmers to stop production of sugarcane on their 6 000 hectors due to water and power disconnections halting a potential electricity generation project they had agreed with Green Fuel to produce ethanol-driven thermoelectric power for the province.
“We have 6000 hectors of land just waiting for the green light from our partner Green Fuel to produce sugarcane. You can imagine if ethanol was to be seriously considered as a major source of electricity in this country, we cannot afford to have electricity deficit as a nation considering the vast land to cultivate it especially here in region 5 were conditions are permitting for sugarcane planting”, said Munodawafa
These will be complemented by the province’s three Independent Power Producers to ensure erratic power supply for Mutare industries is a thing of the past.
The Distressed Industries and Marginalised Areas Fund introduced during the inclusive Government era provide a window for capitalization of struggling industries if industrialist implores government to prioritize funding of this lending resource. Treasury has been slow in releasing disbursement of loans.
With Mutare having been given special economic zone status and Government seized with implementing its strategies, industrialist in the city should thrive to capitalise on special incentives which come with this status such as assurance of utilities, low interest rates, tax reliefs and export incentives.
Analysts have also urged small enterprises involved in similar trade to form mergers as a way of expanding their enterprises so as to increase employment and industrial output. This also enhances indigenous businesses chances of access to borrowing from local finance institutions.
With the implementation of Special Economic Zones gaining momentum, the proposed low interest rates will go a long way in capacitating growing companies to find their footing.
The recapitalisation of Mutare Cairns Foods last year is one example that has raised hope that industry can be revived in the city and renewed positive energy should be channelled towards marketing this special economic zone to ensure the much needed investment to regain the city’s industrial hub status.
Online Reporter