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Deputy News Editor
The deliberate drive to promote local production of goods and the resultant stability brought about by the successful implementation of the Transitional Stabilisation Programme (STP), has seen more companies boosting their production lines and consequently, supplying the local and export markets.
This was said by Finance and Economic Development Minister Professor Mthuli Ncube in an interview yesterday.
President Mnangagwa recently said about 45 percent of products on supermarket shelves were locally produced, up from five percent in 2017.
The President said the worst of Zimbabwe’s economic woes were over, adding that the country “shall rise once again”.
Prof Ncube said the environment of “stability and improved competitiveness, engendered by the successful implementation of the TSP, resulted in improved productivity by our local industry”.
“Import substitution has occurred, where more locally produced products, are being sold in domestic shops. About 45 percent of products on the shelves are locally produced.
“Our industry is also exporting more due to competitiveness bolstered by the introduction of the domestic currency. This is turning exactly as we, the policymakers, had envisaged and intended.”
Prof Ncube said the food and beverages sector has been “quite productive” and is the source of visible products on the shelves.
He said beverage producers, Delta and Schweppes, experienced strong volumes and earnings growth in the last year.
Prof Ncube said to support domestic production for both domestic consumption and exports, the local currency should remain competitive and stable; foreign currency should remain available to producers through the auction system; and the environment for doing business should keep improving.
“Above all, macroeconomic stability should be maintained in order for the micro-economy to be productive. As policymakers, we will not take our eyes off investment in enablers such as infrastructure and energy sectors, and related sectors like agriculture and mining. The future is bright,” said Prof Ncube.
Immediate-past president of the Confederation of Zimbabwe Industries (CZI) Sifelani Jabangwe said: “The food and beverage sectors have done well. There were significant jumps in all nearly sectors. The clothing, chemical and pharmaceutical sectors have also done well.
“Suppliers of mining consumables and builders hardware manufacturers have also had a good run.”
In its 2020 manufacturing sector survey report released early March, the CZI noted that capacity utilisation rose by 11 percent to 47 percent in 2020 from 36,4 percent in 2019, on the back of improved foreign currency availability due to the forex auction system introduced in June, increased sales and retooling.
The CZI expects capacity utilisation to increase to 61 percent this year.
It adds that sustaining the rise in capacity utilisation requires consistent policy process, currency stability to address exchange rate stability, inflation reduction, export promotion, buying local and aggressive vaccination.
Zimbabwe has already started the vaccination exercise with 200 000 more vaccines expected today.
As more companies increase production, more are also exporting, with 61 percent of firms surveyed by CZI last year, exporting their wares.
But volumes remain low as some firms opt to sell on the domestic market since it is easier and cheaper because there no export licences required and less regulations.
In terms of exports, processed foods recorded an 18 percent increase in exports from US$98 million in 2019, to US$115 million in 2020.
Top export products included sugar US$76 million, fruit juices US$5,6 million, pastry products US$3,7 million, and tobacco products US$54 million.
In notes accompanying the 2020 manufacturing sector survey, the CZI said it was encouraging to note that businesses were now accessing foreign currency through formal channels.
“Certainty and predictability has been introduced in the economy.
“The (forex) auction is fostering some measure of confidence and trust in the policy making and implementation process.”
Industry and Commerce Minister Dr Sekai Nzenza told The Herald that there was a “spur of growth in the local industry with capacity utilisation in the manufacturing sector increasing to 10,6 percent.
She added that the jump in exports last year was “particularly pleasing in light of the effects faced by all sectors of the economy due to the advent of Covid-19”.
“During the lockdown, Government recognised the manufacturing sector as a priority sector and designated it as an essential service in order to avert value chain disruption.
“The results are therefore a cumulative effect of Government’s policy thrust which has been anchored in fostering competitiveness by improving the doing business environment and increasing productivity through sector specific strategies. This falls squarely within the mandate of the Ministry of Industry and Commerce Local Content Strategy which presents a framework to encourage local value addition through utilisation of domestic resources and localisation of supply chains. What we see here today in the supermarkets is evidence of economic linkages and business opportunities for local industrial and commercial enterprises,” she said.
Dr Nzenza said for the ordinary consumer, there has been an increase in availability of locally produced products as the manufacturing sector continues to venture into new value added products including those that were previously imported.
The development resonates with President Mnangagwa’s policy thrust for the manufacturing sector pronounced in the National Development Strategy 1, which is premised on ‘moving up the value chains’.
The rise in manufacturing sector capacity utilisation comes as Zimbabwe begins to leverage itself within the Africa Continental Free Trade Area.
Crucially, the increase in the export of processed food exports by 18 percent bears testimony to the local production and value addition of competitive local products, which adhere to the requisite International Quality Standards.
In this regard, the Ministry of Industry and Commerce is already working on a National Quality Policy Framework which will enable manufacturers to better leverage their goods against the global value and supply chains.
Minister Nzenza said her ministry remains committed to collaborating with the private sector in stimulating inclusive and sustained growth for higher productivity in the manufacturing sector.
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