dyton mupawaenda
ZIMBABWE is almost entirely an exporter of commodities, with 80 percent of export value coming from minerals and most of the remaining 20 percent being tobacco, backed by other agricultural products such as cotton.
Even here the commodities are often exported in a raw or semi raw state, with only modest processing before they leave Zimbabwe.
While there is strong pressure on mineral exporters, economic and statutory, to process their ores before they are exported, gold is probably the only product that is fully refined before being shipped.
On the other hand, almost nothing is now exported as raw ore. Platinum group metals are exported as a concentrate, chrome is exported as bars of ferrochrome, nickel is exported as a matte, lithium is exported as a concentrated ore, although a pair of refineries making it the pure lithium carbonate that is traded internationally will open soon, one for the largest lithium miner and the other a Government-backed plant that can contract refine for most of the rest.
But even when all our minerals are exported as fully processed or refined products, we are still exporting the metal, rather than things made from the metal.
It is much the same with tobacco, easily the largest non-mineral export. About one percent of the crop is exported as cigarettes, and another one percent is retained for Zimbabwean smokers.
The other 98 percent is exported as raw leaf, although often with a lot of Zimbabwean initial processing that basically doubles it in value from when delivered by farmers.
Cotton is at least ginned before the lint is exported, as lint, and the seeds are processed locally for cooking oil. So again some local processing, but someone else somewhere is doing the spinning and weaving to make fabrics and then doing the sewing to make clothes.
Both Vice Presidents have brought up this topic during their contributions to discussions at the business seminars organised as part of the ZITF.
Vice President Constantino Chiwenga spoke specifically on value chains. He followed the standard Second Republic line, that the Government creates the business climate and makes investment and business operations as easy as possible, but the private sector is the obvious engine to do the investing and running the operations.
This is now established economics, even in countries with socialist ideological platforms, with Governments acting as regulators and enablers, but the hard graft of production largely done by the private sector.
Dr Chiwenga’s thrust was that the private sector should be continually adding ever more value to the products it makes and exports, with exports especially targeted so more and more Zimbabweans sell things they make, rather than selling the basic raw material.
Vice President Kembo Mohadi went for a more specific target, the opportunities for exports within Africa of manufactured products as the African Continental Free Trade Area becomes ever more operational.
African countries on average do just 25 percent of their trade within Africa. Most, like Zimbabwe, export raw materials to countries outside Africa and then buy back the manufactured goods, often made with those same raw materials.
This is not the most obvious way of doing business when you think about it. One reason why Britain was able to kick-start the industrial revolution at the beginning of the 19th century was because it had huge reserves of coal and iron ore, often next to each other.
But this requires more manufacturing within Africa, and often using products from more than one country. To take one obvious example for Zimbabwe, lithium.
During this year Zimbabwe will probably stop exporting lithium ore and by the end of the year there is a good chance all exports will be of lithium carbonate and lithium hydroxide, the two pure salts that end-users want in the trucks that arrive at their gates.
But that is just a first step, getting maximum value from an export commodity. The largest single use for lithium in the world today, and the reason why prices have been rising and production increasing so fast, is the manufacture of batteries.
The number one raw material in such a battery is lithium obviously, but the number two material is nickel, and Zimbabwe produces a lot. Number three, and it is a further down the list in terms of volume, is cobalt, but the DRC and Zambia are major exporters, and just down the road, literally a day’s truck drive away.
Africa in general, but Zimbabwe in particular, produce more of the world’s raw materials than they consume so there will always be commodity exports.
But we need to make sure these are in the purest possible form so we gain maximum prices, and more stable prices. That means the maximum value is added in Africa.
But we should also be looking at becoming the workshop of the world as a continent, in other words a significant net exporter of manufactured products. When just about every raw material is available in Africa, there is no reason why this cannot be done.
At the very least we should be pushing our national industrial strategies, using our own raw materials and buying anything extra from the closest African source, and encouraging the rest of Africa to follow a similar strategy since the closest African source for a lot of stuff will be Zimbabwe.
We do not have to worry too much about competition. As Africa leaps ahead, the huge expansion in production and wealth will dwarf any comparatively trivial losses from competition.
Online Reporter