adminVandudzai Zirebwa Buy Zimbabwe
President Mugabe finally announced the highly anticipated Cabinet, putting to rest a lot of speculation.
Many Zimbabweans are looking forward to the new Cabinet crafting policies that deliver on promises made during the election period as well as tackle the numerous challenges that our economy is facing.
Chief among these is the revival of the domestic economy and limiting the growth in imports which have reduced our purchasing ability, eroded capacity of local manufacturers and turned us into a laughing stock of our neighbours.
Pride, wealth and jobs which are the cornerstone of our national aspirations and the focus of the Buy Zimbabwe initiative are unlikely to be realised if we retain our present situation.
The World Bank’s September 2013 Economic Briefing presents a grim economic reality, which must be tackled as a matter of urgency.
The report, which cites statistics from ZimStats, notes that exports for the first half of 2013 have declined from US$1,56 billion recorded in 2012 to US$1,55 billion.
Most worrying is the dramatic rise in imports which have risen by 26 percent to US$3,9 billion even before the year has come to an end.
These main imports include fertiliser at US$673 million, food and manufactured goods. This is a matter that demands the urgent intervention of the new Cabinet.
As a result of the steep rise in imports our liquidity situation has deteriorated further with our current account deficit now at 22 percent of GDP.
Consequently, banks are lending less and most companies are finding it impossible to access capital even in instances where they have secured markets.
A further concern is that while imports are shooting through the roof our exports are still largely driven by exports of raw minerals and unprocessed tobacco.
With the swing in international prices this has not only become unsustainable, but poses a serious threat to future economic growth prospects.
Gold, for instance, took a serious knock this year declining by 6,2 percent from the 2012 levels.
As scary as this report may be, issues covered are hardly surprising. For years now Buy Zimbabwe and other economic bodies that include the Confederation of Zimbabwe Industries, Zimbabwe National Chamber of Commerce and National Economic Consultative Forum have warned against turning our country into a giant warehouse for South African and Chinese goods.
Most recently the Potato Growers’ Association has been moaning about the increased dumping of South African genetically modified potatoes on the local market.
Such practices have brought immense suffering to the industry particularly as our quality yet marginally expensive potatoes are now less preferred by Zimbabweans who are now opting for the cheaper GMO potatoes.
Most shops in the country who prefer the cleaner and lower priced potatoes have also embraced the GMOs at the expense of local produce that come out as a dirtier though certainly healthier and more nutritious products.
Unfortunately, this exuberant irrationality of the market has come at great cost to the country as well as the entire value chain.
More and more potato growers are finding the going tough, which is forcing them to retrench and this has seen less revenue finding its way to the fiscus and this has affected domestic demand.
Incidentally, the same shop owners are now moaning about the slow uptake of their stock yet they are part of the problem.
The resultant contagion effect harms all in our nation. This is a problem that is becoming synonymous with all sectors.
For instance, starafricacorporation recorded huge losses because its product sales were being affected by cheap imports.
The company, like many others, is now surviving by the grace of God with serious doubts being cast on its ability to turnaround.
Whenever these issues have been raised some shortsighted analysts have argued that Zimbabwe is not ready to fully embrace a Buy Local initiative.
They have also indicated that the priority should be to build the competitiveness of our industry and commerce and thereafter promote local companies and their produce.
Sadly, the evidence before us now shows that chances of this happening are getting slimmer by the day because of limited funding to build industrial capacity, a glut of imports, low domestic demand and high unemployment.
This country demands nothing less than a radical solution that closes the import gap to sustainable levels. The first point is to realise that we have certain comparative advantages that if unlocked can enhance our export base while decreasing the import bill.
Recently, Government gazetted the compulsory blending of fuel with ethanol at levels of 5 percent.
Buy Zimbabwe and many organisations applauded such a move. However, given the current challenges the levels of blending are too insignificant to influence a reduction in our fuel imports.
Reports are that the country now has the capacity to blend to levels of 85 percent and above and we should be moving in that direction.
By moving the mandatory level higher than 5 percent we will not only be reducing the cost of fuel to consumers, but creating jobs while at the same time taming the import bill of which fuel is a major component.
We also need to take a more structured approach to promoting our organic foods. In discussions with organisations that promote organic food, Buy Zimbabwe has come to the realisation that given our current economic limitations, a country like South Africa with a larger industrial base has an inherent interest in ensuring that GMOs flood our local market.
By their very nature GMOs depend on a strong scientific and industrial base. They also require support from a variety of chemicals to ensure their growth.
As a result, GMO production follows a strong value chain that links farmers to chemical producers, scientists, retailers and many intermediaries.
In contrast, most of Zimbabwe’s produce, comes from smallholder farmers who day in and day out strive to use local material to ensure that their produce survives and is taken to the market.
Because such farmers lack linkages with large and well-funded industries, they often struggle to find the right markets and right prices. Yet with all these challenges it has now been proven that organic produce is good for the well-being of human kind.
However, as the world warms up to GMOs there is a segment that is still clamouring for organic produce and these export markets are opening up.
This is a key competitive and comparative advantage that we can unlock to supply the local and international market. Nevertheless, we need to work hard to unlock this advantage. A concerted nutritional knowledge campaign in our various places such as schools and health institutions will ensure that Zimbabweans realise that GMOs that come in as cheap offerings are expensive and dangerous to their health and well-being.
The new Government, especially the ministry responsible for agriculture, should also move away from simply stating that Zimbabwe won’t accept GMOs to taking proactive steps necessary in creating structural and market linkages that support the various growers of organic foods.
There is also a need to speedily finalise the certification process of organic foods and work with key retailers in creating organic food zones that also offer information on where such foods are grown.
It is through these methods as well as many others that target areas where Zimbabwe has a comparative advantage that Buy Zimbabwe strongly believes that we can reduce our import bill while setting a basis for the strong revival of our export sector.
Such interventions are also likely to find favour with the public as they enhance their own incomes and in some instances result in consumers paying less for produce that comes from the motherland.
Finally, we promised recently to get a comment from Dairibord on why its milk sachets, which came on the market with a bang, disappeared after a short while. According to Dairibord, the product will return to the shelves very soon following the resolving of technical issues that resulted in its withdrawal.
It is pleasing though that Dairibord is satisfied with the initial market response and now knows that it can compete effectively against South African manufacturers. This is also a key lesson we must underline in our quest to put a stop to the menacing growth in imports.
We are most keen to get suggestions on how to tame the growth in imports. We owe it to ourselves to make this country self-sufficient, create jobs and wealth.
Till next week, God bless.
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Online Reporter