Economists hail trade, industrial policies

Both policies, which will be implemented in the next four years, mainly seek to restore industrial capacity and enhance the country’s exports.
“The Government has done a fantastic job. They have come up with policies which speak of a Zimbabwe which we all wish to see in the near future,” South Africa-based trade expert Mr Gift Mugano said.
“However, what is key now is the implementation of the policies and provision of additional institutional support by various players which include the Ministry of Industry and Commerce, developmental partners, civil society and other arms of Government.”
Mr Mugano said the Government should “urgently” operationalise the sovereign wealth fund which will  provide a financial vehicle for the establishment of the Industrial Development Bank.
“The World Bank and other multilateral financial institutions have made it clear that they will not support Zimbabwe until it retires its debt. Hence, we have to use our minerals to address our economic challenges.”
Harare-based economist Mr John Robertson said the documents explain the Government’s desire to see an improved industrial activity.
He, however, pointed out that the policy documents lack explanation on how the Government intends to achieve the objectives of the two policies.
“It’s like a description of the destination but no idea on how to get there,” he said.
The industrial blueprint replaces its predecessor which expired in December 2010.
Among key objectives are to revive the manufacturing sector’s contribution to the Gross Domestic Product by 100 percent to 30 percent.
It also seeks the sector to contribute at least 50 percent of the exports by 2015 while raising capacity utlilisation to about 80 percent.
Also targeted by the sector is replacement of old machinery with new technology for import substitution and enhanced value addition.
This should see the transformation of the country from a producer of primary goods into a producer of processed value added products for both the domestic and export markets through the promotion of viable industrial and commercial sectors.
The industrial policy also calls for the establishment of an Industrial Development Bank that will be primarily dedicated to financing short- and long-term recapitalisation of industry is a milestone.
The Government will identify additional lines of credit of a medium- to long-term nature and make them available to industrial priorities.
As a short-term measure, the Government will initiate revival packages for distressed companies with a clearcut policy basis of a revolving fund.
A key component of the industrial policy is the trade policy, which will be advanced by a separate policy document to support the trading environment to maximisethe  attractiveness of Zimbabwean goods.
The trade policy seeks to increase exports and promote diversification of the country’s export basket through value addition.
It targets export earnings to grow by 10 percent annually to US$7 billion in 2016.
The move to rationalise import tariffs and VAT on industrial raw materials and packaging to level the playing field for locally produced goods will go a                  long way addressing competitiveness of local pro-ducts.
An economist with a local investment bank said a supporting policy on agriculture would need to be put in place if the targets of industrial policy were to be achieved. Manufacturing sector obtains at least 60 percent of its raw materials from agriculture.  
“The industrial capacity can be restored but only when farm output improves. It will be then ideal to have a policy that promotes growth in agriculture and ensure the manufacturers have enough inputs.
“We cannot really achieve competitiveness of our industry if our local companies continue importing raw materials,” said the economist.