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THIS week, The Herald Business reported the turnaround of agro-processing concern Cairns Foods, one of the beneficiaries of Government funding initiatives. Last month we also reported the scheduled return to full production of David Whitehead Textiles, which is expected within the next month.
Cairns Foods recovery, just like many other companies, is premised partly on Government intervention through the Distressed Industries and Marginalised Areas Fund (DIMAF) and policy measures which were meant to limit imports.

Some of the policies implemented by Government to discourage food imports include the introduction of 25 percent duty and 25 percent surcharge on such imports. These measures raised the costs of imports and in the process ensured that local companies could compete favourably in terms of price.

Although David Whitehead Textiles did not directly benefit from Government financing, the company is on the verge of reopening. Once the country’s largest textile concern, David Whitehead has been under provisional judicial management since December.

We can cite other companies that are now in recovery or back to reasonable capacity utilisation as a direct result of Government’s deliberate policy to assist local companies.

Government support through policy interventions is critical to economic recovery. We can draw some lessons from China on how Government may assist infant local businesses to transform into large international corporates.

Reserve Bank of Zimbabwe Governor Dr John Mangudya last week told the Confederation of Zimbabwe Industries annual congress in Mutare that our economy is in its infancy and therefore requires time and a conducive business environment to grow.

He said following the challenges that weakened the economy, it is critical that Government and other stakeholders cultivate and nurture the recovering baby.

Dr Mangudya made a critical point that Zimbabweans should not expect a five-year- old economy to perform like a 34-year-old economy.
The lessons from the development of China which protected and nurtured its local industry until it was strong to compete show the importance of Government intervention in the market.

The recovery of Cairns Foods shows that the input of Government towards nurturing the local industry should never be underestimated. An environment that promotes industrialisation is the panacea to the challenges the economy is facing.

We are not advocating the doling out of funds to companies neither are we campaigning for protectionism. Government interventions could be tailor-made in line with the targeted industries.

Cairns Foods recovery is important to the economy as the company is critical to the value addition of agricultural produce. It benefits downstream and upstream industries.

Agro-processing companies such as Cairns Foods provide a ready market for farmers while adding value to give consumers good value for their money in a world in which GMOS are being marketed aggressively. Therefore, the recovery of agriculture could spell the recovery of the food processing industry and vice versa.

Value addition is a critical component of the Zim-Asset.
Other sectors that Government should focus on include the dairy industry where more than 40 percent of milk is imported. The Government could assist local dairy farmers through targeted interventions and policy measures that will allow for growth.

The interventions could help stem imports which are draining the economy.
The Government should come up with sector-specific interventions and avoid the one-size-fits-all approach.

There is therefore need to focus on companies that have backward and forward linkages and nurture them.