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In the preface of the policy, President Mugabe said it is a noble blueprint for the revival of the ailing industrial sector and expressed hope that it would not be another document that ends up gathering dust in some offices.
“As Government, we are launching this Industrial Development Policy 2012-2016 to address the challenges which weigh down our industrial sector in order to enhance its performance and give it the competitive edge it needs in the challenging global environment,” he wrote.
The vision of the policy is to transform Zimbabwe from a producer of primary goods into a producer of processed value-added goods for both the domestic and export market. The overall objective is to restore the manufacturing sector’s contribution to the gross domestic product from 15 percent to 30 percent and its contribution to exports from 26 percent to 50 percent by 2015 consistent with the Medium Term Plan (MTP).
It is now six months since the launch of the policy, and de-industrialisation has continued to claim victims. It is estimated that more than 80 companies have closed shop in Bulawayo or relocated to other cities and towns leaving thousands of workers without jobs.
To ensure the success of the policy, there is need to focus on the principle of inclusiveness involving tripartite participation in decision making, goal setting and corresponding tripartite acceptance of responsibility for the successful implementation of the strategy between the Government, labour and industry.
While the last decade has witnessed the engine for economic growth and development that is anchored in Zimbabwe’s manufacturing sector declining in its contribution to the gross domestic product from an average of 20 percent in 2000 to below 10 percent by 2008, it is hoped that the launch of this policy, if properly implemented, will return glory to the country’s industrial sector.
The main causes for this decline are well documented not only in the current policy framework but also in other key Government policy documents such as the Short Term Emergency Recovery Programmes (Sterp 1 and 2) and the MTP.
These documents have dealt with issues to do with the slump in prices, ageing machinery, inefficiency of enablers and shortage of development finance due to illegal sanctions.
The Government has identified priority sectors as the pillars for the IDP 2012-2016. They include agri-business (food and beverages, clothing and textiles, leather and footwear and wood and furniture), the fertilizer and chemicals industry, pharmaceuticals, metals and electricals.
These sectors can be developed without massive capital resources, but can be partly re-capitalised from the country’s own resources, therefore there is a need to prioritise the development of the sectors for the realisation of maximum output.
One of the strategies to achieve the policy’s objectives is through industrial financing, where government will establish a dedicated financial mechanism through the re-modelling or restructuring of existing institutions primarily dedicated to financing medium- and long-term recapitalisation of industry.
The Government can identify lines of credit of medium- to long-term nature and make them available to industry on a priority basis.
The target of this strategy is to finance the procurement of raw materials, packaging raw materials, production of consumables, laboratory chemicals, spare parts, repairs and maintenance of plant and equipment and other working capital costs.
The Government, according to the policy, also wants a review of the import tariff structure on customs duty and value added tax on industrial raw materials and packaging to level the playing field for locally produced goods.
Companies in Bulawayo and other smaller towns have already borne the brunt of cheap imports, particularly of textiles. It is evident that the Government and other bodies such as the Confederation of Zimbabwe Industries have failed to promote locally produced goods.
Before independence Bulawayo was famed as the country’s industrial hub. The city accounted for 75 percent of the country’s manufacturing activities especially in the leather, tanning and clothing manufacturing sectors.
But statistics from the Zimbabwe Clothing Manufacturers Association paint a gloomy picture. More than 12 000 people who were employed in the sector’s 195 companies have lost their jobs over the past three years across the country. It is not right for the Government to continue allowing cheaper imports when local producers are struggling because of depressed demand for their products. Lack of adequate controls at the border posts is also allowing many products in without paying duty. This has deprived the Government of revenue as well as rendering locally manufactured goods uncompetitive.
In implementing the IDP, authorities must ensure that duty is reviewed on a number of products and duty-free allowance that individuals can bring in the country. The policy is clear on this issue so it simply awaits immediate implementation to save the textiles sector.
It will be prudent for the country to speedily implement strategies contained in the policy, especially as they relate to the clothing sector. Economic analysts have cast doubt over the time frame — 2012 to 2016 — for the full implementation of the policy as more companies in the sector are still closing shop or relocating from Bulawayo to other cities.
Companies that have either closed down or scaled down operations include Harven which started operating in 1952, Archer Clothing Company which left more than 600 workers jobless, and Belmor Clothing Manufacturers which laid off 300 workers. Other companies are Cotton Printers, Security Mills, David Whitehead as well as textile giant Continental Fashions which had been operating in the country for nearly 50 years.
The absence of an institutional funding mechanism that is well resourced and specifically targeting the manufacturing sector was the biggest drawback of the 2004-2010 IDP.
The new policy can only succeed on a principle of an institutional framework that will only provide the turnaround plan that will harness and provide the required resources for its successful implementation.
At the moment there are no guarantees that only Bulawayo companies will benefit from the $40 million Distressed Industries and Marginalised Areas Fund (Dimaf) recently established by the Government to bail out under-capitalised companies.
It is therefore imperative for Government to either re-model existing mandated institutions such as the Industrial Development Corporation (IDC) or establishes a new financial institution exclusively to provide medium- and long-term funding to the productive sectors of the economy.
It is essential that the policy be an active component of the manufacturing sector with the necessary high-level support from Government.
The funds sourced by the Government both domestically and externally should be centralised and not fragmented to ensure visible impact, and easier monitoring and evaluation.
Entrepreneurs and companies perform effectively when they are operating in an environment which is predictable and stable. Zimbabwe does not have influence over exogenous factors impacting negatively on the smooth implementation of the policy, but it is critical that the framework be implemented in an atmosphere that exudes a positive image and confidence that the Government is keen to realise the vision of an industrialised economy.
Online Reporter