Editorial Comment: SI64 catalyst for local industrial rebirth

18 Aug, 2016 - 00:08 0 Views
Editorial Comment: SI64 catalyst for local industrial rebirth MInister Bimha

The Herald

THE introduction of Statutory Instrument 64 of 2016 in June was viewed with a lot of disdain or outright disgust by many who benefited from the influx of imports.

However, the move might turn out to be the panacea to industrial decay and unemployment in Zimbabwe. Already in response to various controls that have been placed by Government, companies that used to import products into Zimbabwe are now considering setting up manufacturing plants in the country.

Local private firm, Zim-Kings, which specialises in consumer goods distribution, is reportedly planning to set up a detergent manufacturing plant in the Workington industrial area in Harare and this bodes well for industrial regeneration.

Conditions permitting, we all expect the company will extend its production activities to other products it imports namely confectionery, biscuits, snacks, candles and crisps. There is no second guessing what this can do to job creation, the liquidity situation and export earnings.

Industry and Commerce Minister Mike Bimha confirmed, as reported by The Herald Business yesterday, that Zim-Kings is in the process of setting up a detergent manufacturing plant in the country and our hope is that this will expand to other products and send the right cue to other investors. Building domestic and competitive production capacity is the only way to go for sustainable growth.

Relying on imports was never a wise long term alternative, but only a stop gap measure to allow local industry the time and space to build internal capacity to produce most of the products.

Everybody can recall how the hyper-inflationary decade up to 2008 decimated our industrial base, which saw many firms scaling down or closing shop outright due to viability problems.

The few surviving ones are operating at low average capacity utilisation level of about 34 percent, which exhorts us all to give them an opportunity to rebuild their production facilities while allowing new offshoots to take root.

SI64 removed from the open general import licence a total of 42 products Government felt, after consulting local stakeholders, could be manufactured locally rather than be imported.

Expectedly, this was met with a lot of outcry from cross border traders and businesses that were creaming off the dollars from Zimbabwe, including South African companies or suppliers, but in the end the economy should be the winner.

This long term strategy will, arguably, have significant positive implications on local industry by creating a market for products whose importation is now restricted under SI 64, implying less external competition from imports.

We all expect beneficiary companies to take advantage of this grace period, as the cushion will not exist forever, to increase production, acquire new (efficient) equipment and technologies to be able to compete globally in two to three years; when the veil of protection through SI64 will be taken off.

Only blind and unpatriotic individuals will not celebrate the positive spin-offs of measured policy interventions, which seek to promote local industrial capacity and foreign direct investment.

Further evidence of the potential positive impact of import controls, is seen from the commitment made by South African cooking oil manufacturing giant, Willowton Group, to set up a $40 million cooking oil manufacturing plant in Mutare.

Building local capacities creates the buffer that protects the country from external forces and allow it to chart its own course in growth and development and the pace at which it can manage to progress.

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