Value chain promotion to benefit industries

Value chain promotion to benefit industries Minister Bimha
Minister Bimha

Minister Bimha

Business Reporter

The promotion of value chains could benefit both big industry and small-scale enterprises as they realise more from trading in value added products than raw materials. A value chain is the process or a set of activities that lead to the production of a final product. Studies carried out in various sectors of the economy and regionally show that, for instance, primary producers could realise more for their raw materials if they follow through the value chain and sell value added products.

This comes as industry, through its representative body, the Confederation of Zimbabwe Industries, has identified opportunities and gaps in 18 value chains as the private sector seeks to drive the country’s industrialisation strategy.

The CZI has produced a booklet titled: “Value Chains Mapping – Mapping of Value Chains in Zimbabwe for Economic Development”, which will assist policy makers in crafting policies that are relevant to every segment of the economy, according to CZI president Busisa Moyo.

While presenting the booklet to Industry and Commerce Minister Mike Bimha last Thursday, Mr Moyo said the value chains study is line with Africa’s vision to industrialise and in line with the country’s Zimbabwe Agenda for Sustainable Socio-Economic Transformation, the Ten-Point Plan and sustainable development goals.

“These value chains are only the beginning.

“It is not an exhaustive list but it is the first edition in terms of value chains that we have identified,” said Mr Moyo.

“We believe that if we are to industrialise and develop as a nation we need to take a value chain or cluster approach and this book summarises 18 value chains that we have identified. The essence or the underpinning principle of these value chains is that some of our value chains are broken. There are missing pieces to the value chains,” said Mr Moyo.

The value chains identified by the CZI include the asbestos-to-roofing/piping-to-construction materials; diamond-to-jewellery-to-ornament; gold-to-jewellery-ornament; chrome ore-to-chromium-to-fabricated steel product; iron ore-to-billet-to-foundry-to-fabricated steel product; limestone-to-quarry-to-cement-to-construction; coal bed methane-to-gas-to-plastics and allied value chain.

Other value chains include cotton-to-clothing; soya-to-white-meats (incorporating stock-feeds for the beef industry); tobacco-to-cigarette; maize-to-maize meal (incorporating stock-feeds for the beef industry); beef-to-milk-to-leather; horticulture production-to-can/packet/bottle; regional – assembly-finishing value chains (including automotives, plastics, paper and ICT) and pharmaceuticals- pharmacy-hospital- patient value chain, among others.

Mr Moyo said the value chains form the bedrock of what industry believes to be an economic development plan for industries in Zimbabwe going forward.

An Agriculture Value Chain Analysis undertaken by Chiukira Gideon and Sandra Juru titled: Maize and Soya Bean Value Chain Analysis showed that a maize farmer can realise more than double per tonne, less operating costs, if the value chain and value addition concept is adopted.

The purpose of the presentation was to highlight and recommend promising agricultural chains that could be developed to give meaningful economic benefits to small holder farmers.

The study showed that if a maize farmer sales a tonne of maize the average price is about $300. The farmers can thus be taught and organised into cooperatives or clusters were they can process maize into maize meal and packaged it into the 5kg, 10kg, 20kg and 50kg packets.

With the average price of processed roller meal at 0,50c per kilogram therefore a tonne would fetch $500 there by giving the small holder farmer an additional $200 per tonne, though processing cost will need to deduct.

“Using the same price a tonne of maize at $300, if a farmer processes the maize into maputi, the process per unit will be high as well.

“There are three types of maputi namely: dry maputi, oil maize snacks and Spiced maputi,” the study said.

The average price per 50 grams for dry maputi 10c; oil maize snacks 25c and spiced maputi 35c.

The study shows that a 50kg of maize can fetch approximately an average of $150 after value addition per tonne.

“However it should be noted that manufacturing costs needs to be factored in and these include labour, power, rentals, and packaging and other production costs. Nevertheless the farmer will be rewarded handsomely by value addition than selling raw maize grain to (the Grain Marketing Board) GMB and millers or oil processors,” the study said.

Minister Bimha said Zim-Asset embraced the industrial development policy in stressing the importance of value addition, making use of abundant resources be it in agriculture or mining.

“Therefore this (value chains mapping) is a very welcome development.

“You will also note that Zimbabwe was the force behind the SADC Industrialisation Strategy and Roadmap.

“In the Industrialisation Strategy and Roadmap for SADC, the issue for value chains takes centre stage.

“That is the starting point of being able to trace the entire product right from the beginning up to the end. That approach is what we want to follow,” said Minister Bimha.

Minister Bimha said issues of value chains and value addition have been extended to the continental institutions.

“We also would like to go further and build value chains within a regional context. We have also taken this whole issue further to COMESA and are talking about the Free Trade Area and again issues of industrialisation and value chains take centre stage. Africa needs to trade among itself. We need to boost intra-Africa Trade but we cannot do it if we are all selling raw materials, if we are not engaging in some form of value addition,” he said.

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