Editorial Comment: Value addition, competitiveness the answer Minister Bimha
Minister Bimha

Minister Bimha

THERE is no doubt that Zimbabwe needs to build anew its industrial base, creating wealth, providing decent jobs and by boosting exports and decreasing imports do something about our appallingly bad balance of payments.
The question is how should we build this new industrial base and how should priorities be fixed? Unfortunately, the debate is clouded by some who want us to return to an industrial policy built around import substitution, a policy which in the end failed. A managed economy built around Government controls and an import-substitution industrial policy was introduced in 1965 by the Smith regime to fight economic sanctions. It worked reasonably well for a couple of decades and then started failing, as could have been expected.

Examples from around the world of such an industrial strategy all show the same pattern. Good fast growth for a couple of decades, followed by stagnation followed by collapse. Industrialists became lazy without competition, investment in new technologies dies, ancient machines and even more ancient industrial methods become the norm, quality goes down, absolutely as well as comparatively and prices eventually rise. It simply is a non-starter.

So the report of one of the committees that reported to Industry and Commerce Minister Mike Bimha recently appears to have missed the point.
Many have pointed the way forward for Zimbabwean industry, including President Mugabe. This correct strategy is two-fold: one path involves processing our own raw materials and exporting semi-finished and finished goods instead of loading trucks with ore, fibre and grain; the other path is for Zimbabwean industrialists to compete effectively against imports in an open environment and win on quality and price.

For the first path tobacco offers a reasonable example. We do not export raw unprocessed leaf. Zimbabwean merchants buy and sell the leaf but they sort and process it first.
This doubles what the country earns from this crop and now there are plans to export a lot more cigarettes and lot less tobacco leaf and considering some of the smart people who have entered the industry in recent years we are confident that this strategy will succeed, with Zimbabwean tobacco companies making cigarettes and packaging to suit many markets.

For the second path we would like to exhibit Delta. When the multi-currency regime was introduced there was noise from some in that company that imports were killing it. Then the noise stopped and the action started. Delta modernised its factories and bottling lines, introduced a wide choice of packaging, built relations with the new farmers for raw materials and retained its quite incredible distribution system.

And a few weeks ago it knocked a few cents off its prices. The net result is that Delta totally dominates the local market for its products; imports are just an occasional change for its customers. Delta won back its markets because it beat the competition, not because someone banned the competition. And it pays a lot in taxes, benefiting us all.

Others are following these paths. Walk past a Bata store, or look into a few of our clothing factories, although some are irritated that they have to import materials because of deficiencies upstream. We do not hear much from the managers and owners of these businesses because they are too busy running successful industries. So we think the report of the second committee that reported to Minister Bimha is infinitely more important. This one reported on the difficulty of doing business in Zimbabwe and starting businesses in Zimbabwe. And here the Government can, and should, do something. We need to make it easy to open a factory, easy to do business and we need, without allowing exploitation, more flexible labour policies.

Some of these new businesses will fail and we must let them. But so long as the industrial base is growing then skilled experienced workers can move from the failures to the new successes; everyone in business values skill, hard work and experience.

Unless we do this we risk falling behind.
A growing proportion of our imports come from Zambia where a change in industrial policies has created a group of go-ahead industrialists who are not afraid of competition and clearly see themselves as major companies in a growing, open and highly competitive regional market, winning customers throughout southern Africa on quality, price and service. We need more of these sort of men and women ourselves, rather than people wanting to save the dinosaurs or return to protectionist policies, and we need to make it easy for them to do business in Zimbabwe.

We have the resources, we have an educated work force thanks to post-independence education policies, we still have a reasonable industrial infrastructure and service sector. Now we just need industrialists and investors who can put the three together and create wealth and decent jobs and to see the economy expand quickly.

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