admin“This is the year of learning,” goes the saying that has gone viral.
Captains of industry are gathering at the 2015 Confederation of Zimbabwe Industries congress come month-end to learn how to “unlock manufacturing competitiveness’’ as inspired by their theme.
But do they have the right key?
You see, there is a bunch of all these other keys and not every one of them can unlock this colossal gate of competitiveness to usher in the industry into the renaissance realm.
There is urgent need to develop local industries with a view to fostering enhanced quality of lives for the citizenry.
Section 8 of the Constitution talks about the need to create a “society in which people enjoy prosperous, happy and fulfilling lives” which I would want to call the “Zimbabwean Dream”.
However, that Dream cannot be attained if our industries are not competitive.
We, therefore, should hasten to find that key. That key should unlock manufacturing competitiveness before it is too late.
We cannot wait a day longer.
Globalisation is not waiting for anyone. As regional integration also intensifies, with duty-free and quota-free trade proliferating, you do not want to be caught locked outside the gates of competitiveness.
And regionalism seems to be gearing up. We are in the fast lane.
By June 15, 2014, the World Trade Organisation had received 585 notifications of Regional Trade Agreements; of which 379 were already in force, compared to about 30 in the 1990s.
Just last month, Zimbabwe and 25 other African nations came together to launch the Tripartite Free Trade Area.
In light of the above, cut-throat competition is intensifying, left, right and centre.
Only the competitive can survive.
It’s almost like a jungle where survival is a privilege of the fittest. Take the European Union, for instance, which we have inked an Economic Partnership Agreement with, to allow for trade to occur under preferential terms.
If countries in the EU use state-of-the-art and efficient machinery in their production, as is the case, while we remain condemned to our obsolete and inefficient machines, it simply means that Europe can export more to us while we cannot.
Their products will heavily compete with the substitutes we make here, both in terms of price and quality.
The fact that the euro is also depreciating, while the US dollar is doing otherwise, is also a bonus to Europe, as the terms of trade continue to be much to their advantage.
The same can be said about South Africa, our biggest trading partner.
If we remain uncompetitive like this, we might as well start writing the manufacturing epitaphs.
And how does this one sound: “Here lies the remains of a sector that once was the biggest contributor to the GDP.”
Did I scare you?
Then I am happy; because chances of this happening are there if we do not quickly change our ways.
This is why we have to be serious about unlocking manufacturing competitiveness so that we can have the might to beat these headwinds.
The days of producing as if there are no international competitors are long gone.
As long as the degree of superiority by which our local firms produce goods and services cannot be compared to that of our international peers, then we are still trying the wrong keys.
But we can protect ourselves till thy kingdom come, some may want to argue.
Which is why in Zimbabwe, there was a time when protection was apparently granted to anyone who could just shout the loudest.
Protection, please note, is fast losing its grip.
Nations that we protect ourselves from can simply retaliate by increasing their tariffs against us when we want to export to them; just as subsidies can be countervailed.
But I don’t want to downplay the role that protection can play in genuine cases.
When talking about competitiveness, there is also a tendency for the captains of industry to say “Government must” instead of “we must”.
Government largely focuses on national competitiveness, while captains of industry should focus on firm competitiveness.
It is no secret that Government has no fiscal space to dish out all the freebies of national competitiveness.
But it is trying, as the latest Global Competitiveness Report has seen the country moving seven steps up the ladder. Government is also in the process of creating a National Competitiveness Commission, apart from commissioning a cost study. There is room for more.
But my focus is on firm competitiveness.
Are captains of industry doing enough? I would argue that manufacturing firms still have more “fiscal space” to ensure firm competitiveness.
Granted — the industry is facing a myriad of challenges, from high utility costs to lack of working capital, to just about everything else; but there are other areas that manufacturing firms still have room to focus on to foster firm competitiveness.
And this is the “fiscal space” I am talking about.
Let’s take their work environments, for instance. We all know that workplaces are supposed to provide the best environment that workers can utilise to maximise their efforts in the competitiveness agenda.
But if we are to look at the indicators of whether our workplaces in the country are safe and healthy, we will be alarmed.
The Lost Time Injury Frequency Rate (LTIFR), which measures safety and health of workplaces, was found to be 2,27 in 2014 by the National Social Security Authority.
This is way above the standard of one.
A workplace with an LTIFR of one and above is deemed to be unsafe.
Can we honestly expect any competitiveness to come out of workplaces like these, where workers are, perhaps, afraid of getting injured?
Nssa also found out that only 18 percent of local companies have occupational, health and safety policies. The rest are, well, without such.
Industrialists who expect to attain any meaningful competitiveness without first addressing their workplace safety are riding a rodeo bull. Talk of putting the cart before the horse. The workplace is an integral part of the golden key that unlocks manufacturing competitiveness.
Then you have research and development (R&D), which is a valuable tool for growing and improving manufacturing firms, albeit being downplayed by some captains of industry. How many captains of industry have R&D departments at their firms?
Yet, if we are to fully unlock manufacturing competitiveness, there is need for captains of industry to research their markets and their customers’ needs and develop new and improved products.
Or should it continue to be business as usual?
You see, the need for new and improved products is indispensable in this environment.
This is an environment whereby 91 percent of our total exports are concentrated to only three countries, namely South Africa, Mozambique and Belgium.
There are only two ways out of this situation: developing new markets and new products.
However, export diversification requires us to be serious about R&D.
Again, we are talking about learning to lean on Lean. I have no doubt that adopting Lean production will change the way we look at manufacturing for the better.
However, we must also know that there are sacrifices that we must be prepared to make to fully benefit from Lean.
It cannot be business as usual.
We have to be prepared to retrain our workforce, with Government also developing responsive curricula. The last edition of the CZI survey laid bare some of the things that industrialists take for granted, yet playing a major role in the competitiveness agenda.
Take the issue of renewable energy, for instance, where only a handful of firms are utilising it, with the rest depending on electricity which they complain about being expensive and not always available.
Government also plays a major role in this whole competitiveness agenda. Its policies can either make or break the manufacturing sector. So far, its policy stance on taxation and other regulations apparently supports de-industrialisation.
There, I said it.
Our taxation structure seems to punish the guy who comes out to be formal. He is stoned to near death. The levels of our taxation, if plotted on a Laffer Curve, will land on that point where it says they are now resulting in diminishing revenue, apart from also being an albatross to the manufacturing sector.
Much can be equally said about the regulations, as the study conducted by CZI on this issue can prove beyond doubt.
The Industrial Development Policy (IDP) is finishing its final course next year, sadly without a ribbon on its chest. Some have actually forgotten already that such a policy exists.
Indeed, we cannot expect the IDP to perform any miracle for the little time it is left with.
This is, therefore, the time for Government to kick-start extensive consultations for a comprehensive successor policy to the IDP. Such a policy should be long-term and put competitiveness at the centre.
Zimbabwe has the potential to emerge with a dynamic and competitive manufacturing sector. We just have to quickly find the golden key.
Online Reporter