Tinaye Agere
THE 7th SADC Industrialisation Week kicks off today, marking the commencement of a pivotal period that seeks to add impetus to regional economic development and industrialisation. The Sunday Mail’s TANYARADZWA RUSIKE spoke to Industry and Commerce Minister MANGALISO NDLOVU on the significance of the week-long event.
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Q: Zimbabwe is set to host the 7th SADC Industrialisation Week (SIW) starting today. What is the significance of hosting this annual conference?
A: Hosting of the SADC Industrialisation Week came as a deliberate move taken by the SADC Heads of State in 2015 to say that since the bloc had developed and adopted the SADC Industrialisation Strategy and Roadmap, there is need to follow up on the progress made, but more importantly, to popularise the roadmap so that member states and the private sector therein continue to industrialise as guided.
This conference, in the main, provides a platform for the SADC Secretariat to update member states on the progress they are making each subsequent year in terms of implementing the roadmap.
The indaba is significant for Zimbabwe as it provides a platform to showcase our progress in terms of our industrialisation drive, and also for us to benchmark against those member states that have advanced more than us.
Furthermore, the event will allow for local products to be showcased to potential markets within the SADC region for increased exports.
In addition, there will be an investment conference that will be held on the sidelines of the SADC Industrialisation Week, where local players will have an opportunity to forge investment deals with counterparts in the region and beyond.
Local companies will be able to participate within regional value chains, benefitting from a wider market and reliable supply chains for raw materials and equipment.
Q: Can you outline issues set for discussion during the SADC Industrialisation Week?
A: The event will look at various topics on the promotion of industrialisation, innovation and value chain development for regional integration.
Issues on the promotion of entrepreneurship for youths and women, as well as aspects of the circular economy, will be up for discussion.
Business-to-business networking will also be facilitated for the private sector and potential investors who will grace the event.
The event will conclude with visits to selected companies to showcase our industrialisation progress as a country.
These companies have been selected along value chains, as well as export potential.
The event will be officially opened by His Excellency, the President, Dr Mnangagwa, and this shows the importance accorded to the SIW.
There will also be an investment conference, which will be held on the margins of the SIW, where the Vice President, Dr Constantino Chiwenga, will be the guest of honour.
Q: How will Zimbabwe showcase its industrial capabilities during the event?
A: Zimbabwe will have its local industries exhibiting at the event, showcasing its unique products to other member states.
In addition, 13 companies have been selected to be visited by delegates so that they may appreciate our industrial capabilities.
These companies will include Dinson, Zimplats, Kefalos, Dairibord, Dendairy, National Foods, Champions Foods, Davipel, Olivine, Seed Co, Irvine’s and Khayah.
This will provide delegates with a practical appreciation of what we are doing as a country to promote manufacturing.
Q: How will the outcomes of this event impact Zimbabwe’s industrial sector and the broader SADC region?
A: The event will result in increased access to a market of about 400 million people in the region.
You would appreciate that Zimbabwe is a small market.
It is important to explore and penetrate the region before we can think of adequately servicing the rest of the continent under the African Continental Free Trade Area (AfCFTA).
The investment conference is going to be graced by a number of investors and financial institutions, including development finance institutions (DFIs) and this will present an opportunity for member states to pitch their projects before potential funders.
Furthermore, the event will enhance regional integration through development of regional value chains, where each member state will concentrate on value chains in which it has comparative and competitive advantage.
Q: The Government has implemented various measures to support the manufacturing sector. Can you detail some of the key initiatives implemented to improve performance?
A: The Government has been promoting local procurement of goods and services through implementation of a number of policies and strategies, including the Industrial Development Policy and the Local Content Strategy.
Through Treasury, fiscal incentives have been provided to support the manufacturing sector, where raw materials and equipment are imported duty-free.
Also, value-added tax (VAT) deferments on imported equipment are being granted to companies to improve their cash-flow positions, thereby unlocking funding for other commitments.
Through the Agriculture and Food Systems Transformation Strategy, the Government has been promoting local production of crops that are critical feedstock for the manufacturing sector so as to reduce imports, as well as minimising supply chain disruptions.
Furthermore, fiscal and monetary policy interventions have been able to stabilise the macro-economic environment, a critical factor for improved manufacturing performance.
You would realise that the devastating effects of sanctions left our industries suffering and struggling to compete because of the barriers brought about by these measures.
We have had to take deliberate steps to nurture these upcoming industries by controlling what comes through our ports of entry.
Our next fight will be to eradicate smuggling and selling of counterfeit goods; this illicit practice is surely destined for doom as we will soon unleash the might of the law.
Q: Are there any specific programmes or incentives being offered to encourage investment and growth in the industrial sector?
A: The Government, through the Ministry of Industry and Commerce, is in the process of reviewing the Zimbabwe National Industrial Development Policy, which expired in 2023.
The end process will result in a new industrial policy framework that seeks to continue addressing challenges bedevilling the industrial sector.
Also, the Government is accelerating implementation of the Local Content Strategy, where engagements have been made with ministries, departments and agencies (MDAs) to give priority to procurement of locally produced goods.
As the chairperson of the thematic pillar “Moving the Economy up the Value Chains and Structural Transformation”, under the National Development Strategy 1, the ministry has been working hand in glove with the private sector to strengthen our critical value chains.
Ten value chains have been prioritised by the Government, where support, through policy interventions, is being rendered.
Through the Treasury, fiscal incentives have been provided to local industries through duty-free importation of raw materials and equipment, enabling companies to have access to latest technologies for improved competitiveness.
The introduction of the local currency has had positive spinoffs for the industrial sector as this has increased its competitiveness on the market.
The resultant exchange rate stability has seen an increased market share for formalised business entities as well, supporting stable decision-making systems.
Q: Last season’s drought has undeniably impacted various sectors of the economy. How has it specifically affected industrial production in Zimbabwe?
A: The El Niño-induced drought has mostly affected agro-processing industries. There have been disruptions to local supply chains for agro-processing industries in terms of throughput.
Even those industries that supply the agriculture sector, mainly with inputs, have not been spared. Fertiliser and agro-chemical companies are some of the most affected as they experienced reduced demand for their products.
Resultantly, local companies have alternatively resorted to imports. Imports have, however, been taking longer lead time as supply chains are disrupted by the ongoing geo-political conflicts.
Further, the need to prioritise procurement of food has reduced spending on other industrial sectors, thereby reducing effective demand for these sectors.
Q: What measures is the Government taking to mitigate the impact of the drought on the industrial sector?
A: The Government has been allowing companies to freely import food items such as maize and wheat to augment local supplies.
For companies that are in the agro-processing sector, preference is given to them to import the shortfall so that they don’t lose touch with the market.
Climate-proof agricultural practices have been enhanced to support increased production of agricultural crops, which are key throughput for agro-processing industries.
Q: Recent reports indicate declining levels of industry capacity utilisation across different sectors. Can you elaborate on the current average capacity utilisation in Zimbabwe’s manufacturing sector?
A: As per the Confederation of Zimbabwe Industries (CZI)’s manufacturing sector survey report for 2023, capacity utilisation dropped slightly by 2,9 percentage points, from 56,1 percent to 53,2 percent.
This was mainly attributed to some phases of exchange rate instability, which were experienced in 2023, but more precisely, it is a result of the capacity that companies added (by investing in new equipment), which they are yet to fully explore. It then gives the net effect of reduced capacity utilisation. On the exchange rate front, the issue has since been resolved as the monetary authorities brought in measures that supported a stable macro-economic environment.
Q: What are the short-term and long-term prospects for Zimbabwe’s industrial sector?
A: The growth prospects for the industrial sector are looking positive given the fact that there is an anticipation of a good rainfall season, which will certainly increase opportunities for those in agro-processing sectors.
Furthermore, the sustained macro-economic stability being experienced will certainly support industrial growth for this year.
The coming on board of huge companies such as Dinson will drive the industrial sector, more particularly in the iron and steel sector, which has strong cross-sectional synergies with other sectors, and which is one of the leading import-intensive sectors in our economy.
Furthermore, we have been witnessing huge investments in state-of-the-art production plants across the country, a sign that the prospects for the industrial sector are sustainably positive.
Q: Are there any emerging sectors or industries that you believe will drive industrial growth in Zimbabwe?
A: I believe our mining and agricultural growth provide industry with the right impetus for growth. As a result, these primary sectors form a solid base for the growth of the manufacturing sector.
Lithium value addition, including value adding PGMs (platinum group metals), is one sub-sector to look forward to.
The value addition of lithium into batteries for electric vehicles will spur industrial growth, underpinned by a surge in demand for electric vehicles.
Our abundant iron ore will drive the growth of the iron and steel industry, where, for instance, Dinson has come on board with potential to be the biggest stainless steel producer in Africa.
Over the years, we have been importing over US$1 billion worth of steel, and that is going to be a thing of the past.
I see greater scope for growth in oil expressing if we continue to support seed crushing, as opposed to importing crude oil.
I also expect that the village business units that His Excellency, the President, is introducing, will be catalysts for rural industrialisation, where aggregation in each district should ordinarily lead to some factories being set up.
This is a strategic move that crowds in virtually everyone across the board in the economic development of our country.
Of course, looking at the SADC region as a market and also the African continent as a whole, I see a number of companies in the food sector coming on board.
Q: What role do you envision technology and innovation playing in the future of Zimbabwe’s industrial sector?
A: Adoption of latest technologies ensures that the industrial sector produces goods and services more efficiently, thus enhancing competitiveness.
This is in line with the tenets of the Fourth Industrial Revolution, which will allow Zimbabwe to trade competitively in the region and beyond. The coming in of the African Continental Free Trade Area will certainly require that our industries produce more competitively through adoption of latest technologies.
Innovation, on the other hand, allows the industrial sector to develop more comparative advantages.
It encourages entrepreneurship among the youths, who are our future industrialists.
In addition, innovation allows the country to exploit its heritage-based endowments, in line with Education 5.0.
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