Online Reporter
The agro-industrial sector, including the food processing industry, has long been a centrepiece of Zimbabwe’s industrialisation with this going right back into the early colonial era, since converting crops and livestock into groceries and food products makes good market sense.
Growth has been steady and incremental, but rising populations, rising standards of living, and the farmers growing ever wider ranges of crops, so providing the raw materials for local production, have seen that growth accelerating in recent times.
The Second Republic’s pro-business and pro-investment policies, along with its determination to expand agricultural production through research and financing inputs, have helped provide the environment that allows the industrialists to connect those better farmers with the growing number of consumers of processed foods.
This acceleration in investment has seen just this week two major Zimbabwean industrial food processing companies commission advanced new equipment and factory space with total investments of well over US$20 million.
That large sum was from their own Zimbabwean resources which shows the strength of the sector and its ability to not just have self-sustaining investment, but to expand its ranges of products.
While foreign investment is always useful and desirable, the fact that the private manufacturing sector, at least in its areas of core competence, maximum experience and with a large domestic market, can continue making its own investments is important.
That sort of industrial and financial strength also sends messages to other investors that Zimbabwe has a very worthwhile business environment.
Early in the week, Nestle Zimbabwe commissioned its fourth roller dryer cereal plant after investing US$7 million.
Yesterday the largest single agro-industrial company, National Foods, commissioned a US$6 million pasta factory, a US$7 million breakfast cereal extrusion plant, and a biscuit production line.
Speaking at the commissioning of the multiple National Foods investments, a pleased President Mnangagwa not only commended the company for expanding the range of its products as well as the volume and value of what it produces, but noted that the private sector investment reflected the national capacity to produce what we consume and compete in regional and global scales in terms of products and productivity.
Zimbabwean industrialists do not get protection from imports, and so have to produce the right products at the right prices to flourish.
This will become increasingly important as the African Continental Free Trade Area becomes more active and a modern industrial sector making the right products at the right price will be among the continental winners.
A most-important part of the National Foods investment, stressed by the President, was the pasta factory. This is built upon the fact that over the last three years Zimbabwe has moved from being a wheat importer to having a surplus of wheat grown each by motivated farmers.
This obviously made raw materials available for a lot more than just bread and cakes. The biscuit line appears to be another beneficiary along with the pasta production of these new supplies of wheat.
One important part of industry is using local raw materials to make the products, with the suppliers of these materials just down the road from the industrialists, rather than relying on foreigners far away who in any case probably find it easier to deliver to factories and millers in their own countries.
Assembly from outside parts or partly processed products is all very well, but real growth and a solid core of industry must be with the local materials.
There has been discussion over the need to widen the range of wheat varieties grown in Zimbabwe for many of these new products that are now possible with the Government programmes to support farmers to produce more, but we would assume that local industries such as National Foods can contract out or otherwise support such an expansion in range.
As the President noted, Government and private sector programmes and investments can be interwoven for maximum benefit
One advantage of using local producers of raw materials is that it is easy to set up excellent contacts, as another local agro-industrial giant, our main breweries, has set up to make sure that it has farmers on tap who can produce the precise varieties of barley and sorghum that it wants for its beers.
The President was also keen for Zimbabwean industry to move away from being purely a supplier for local markets, something that grew up in the decades when a primary purpose of industry was import substitution, cutting imports to save foreign currency rather than exporting to earn more.
Here the food processing industries are in that essential business space where they can move into regional and continental markets. Industries reliance on imported materials and components are obviously limited when they look at export markets, but those whose supply chains are almost entirely Zimbabwean are clearly in a more commanding position.
As we start building up our heavy industrial base, such as the steel industry and the chemical industries, we will be producing far more of the raw materials and intermediate materials that other industries need, allowing that switchover from packers and assemblers for local markets to producers for far larger markets.
Adding value to our own crops and minerals is the way classical economists would see the future of at least the largest and most vibrant sectors of our industrial base.
It is here that the food manufacturers have been leading our industrial drive and, as their latest investments show along with their financial ability to make those investments, are leading that drive in the right direction.
