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Zim’s route to industrialisation: Boom or gloom?

06 Jul, 2018 - 00:07 0 Views

The Herald

Edward Muguza Correspondent
Over the past decades, Zimbabwean industries faced significant economic challenges which slowed down production.
Industry capacity utilisation ranged around 30 percent during the 2008-2009 period and only rose recently to the current 50 percent (CZI, 2018).

This grim performance has been offset by high levels of cheaper imports from neighbouring markets, which has been a major strain on the country’s fiscus.

As the country turns a new leaf, there is an absolute agreement that the situation needs to change – there is need to bring back industries, raise production and get Zimbabweans working again. However, there is an open debate on the correct route to industrialisation. One school of thought is pushing for the recapitalisation of economy to bring back ailing smokestack industries, while the other is advocating for an alternative route driven by smokestack-less industries and new ways of production.

At the Development Reimagination Group (DRG), we align with the latter, believing that the days of smokestacked industries with intensive labour needs are behind us. To quickly catch up with the industrialised world, Zimbabwe needs a new model of industrialisation, different from the one adopted by the Asian tigers.

Today’s industries should be designed with a futuristic mindset to ensure issues of climate change, sustainable infrastructure, jobs of the future, open markets, and technological innovations are at the forefront.

Powered by the prevailing energy from the political rebirth, Zimbabwe has an opportunity to leapfrog certain industrialisation stages and get it right from the onset. However, a flexible but robust policy environment coupled with strong leadership and political will are required to guide the country’s industrialisation process in the 21st century.
We believe that there are 10 considerations for Zimbabwe as it seeks to industrialise its once vibrant industries.
This week we will look at five of these, focusing on local concerns and next week we will turn to the regional and international context.

Close current industrial infrastructure gap
There is no question that the current industrial infrastructure is outdated, some dating back to the colonial period when production was aimed at a small population and geared towards self-sustenance. Post-independence, the Government did not redesign the industrial infrastructure to accommodate a growing population and changes in the country’s production factors.

As the country seeks to re-industrialise, there is need to create one-stop shops to increase efficiency and ease movement of goods and services.

There is a need to build direct railway and road links to major ports in the region, and revamp its local rail and road network to facilitate the movement of heavy goods.

The country still faces huge shortages of energy supply, which is crucial for industry’s 24-hour operations, and expand the water supply network to service the whole industrial ecosystem.

As Zimbabwe engages various investors, it needs to weave out deals that aim to bring outdated infrastructure, which may be costly to maintain and replace, as global industrial standards evolve. It also needs to seriously consider the sustainability of the proposed infrastructure to support current and future needs of Zimbabwean industries.

Adoption of advanced technologies to increase efficiency
Zimbabwe is currently over 10 years behind with respect to technological advancements. However, by adopting futuristic technologies that enhance production processes and heavily lower production costs, the country has a unique opportunity to leapfrog certain stages of technological advancement.
There are many case studies for Zimbabwe to learn from to advance its industry technologies in ways that address current global concerns and the challenge of short-term tech system lifespans. For example, the use of drones to monitor and detect leakages in irrigation systems to improve agricultural yields in countries like Israel.
The adoption of any kind of technology to improve industry operations does not come cheap, thus, Zimbabwe needs to ensure value for money by acquiring highly modern and state-of-art technologies that will support industries for years to come.

Focus on the country’s comparative advantage
Industrialisation in Zimbabwe needs to be re-imagined from first principles of comparative advantage for it to produce goods that are competitive on the regional and global markets. Consequently, there needs to be a comprehensive review of the country’s input base ,including, and not limited to the country’s human resource capacity to justify the goods the country aims to mass-produce.

The country’s current focus on the agriculture, mining, manufacturing, tourism, and services sectors is ideal as it leverages its skilled and unskilled human resource base as well as its abundant natural resources – minerals, arable land, natural environment and climate. However, there is need for sector-specific policies that outline the extent to which a sector is developed based on comparative advantage grounds.

For example, there is no scope for end to end car manufacturing in Zimbabwe due to the high set up costs and the complexities of developing car manufacturing value chains that produce cars at lower costs than leading car producers.
Yet, there is scope for assembling cars through partnerships with established car manufacturers. The car assembly market needs to be protected by banning the importation of second hand cars from markets like Japan and the UK as well as consolidating local demand with the Government spearheading the consumption of locally assembled vehicles.

Edward Muguza is the founder and director of DRG, an African-managed development think-tank and business advisory firm in Harare. [email protected]

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