HARARE – Zimbabwe trade promotion body, ZimTrade, says the country is quickly de-industrialising and government must come up with policies to help revive local industries.
Despite an ephemeral rebound in 2009, capacity utilisation in the manufacturing sector is on the decline as companies continue to be choked by liquidity challenges affecting the economy.
An estimated $2 billion is required to fund the revival of industry in Zimbabwe.
Bulawayo is the hardest hit city by de-industrialisation and the city has seen more than 80 companies close in the past few years leaving more than 20 000 workers jobless.
“The fact on the ground is that the country is de-industrialising. Something must be done as a matter of urgency to curb this phenomenon,” said ZimTrade operations manager Stanley Tupiri.
“Government must put in place policies that attract Foreign Direct Investments and joint ventures to help revive industry. Otherwise we will end up being a market for other countries especially in light of opening up under the various regional trade initiatives.”
Zimbabwe’s imports have continued to grow on the back of low industrial capacity utilisation which is currently estimated at around 50 percent, with no immediate solutions in sight.
Presenting the Mid-Term Monetary Policy Statement central bank governor, Gideon Gono, said the country’s import bill was projected to rise further by eight percent to $8,2 billion or 75 percent of Gross Domestic Product in 2012.
This coupled with net service and income outflows will lead to a current account deficit projected at $3,1 billion.
Last year alone, Zimbabwe imported $11 billion worth of goods against $3 billion worth of exports, which created a $5 billion trade deficit.
Tupiri said the most important step to reduce the import bill is ensuring improved local production, both quantity and quality. There is need to increase current capacity and build new factories.
“Once we have excess supply of competitively produced local goods then imports would naturally decrease whilst exports increase, holding other factors constant. There is a serious need to retool the local industry, provide working capital to facilitate more manufacturing and create a business friendly environment.”
“Policies must be urgently put in place to support the local manufacturers. Our current import bill is mainly constituted of consumer products/goods which clearly show the demise of local industry. Among major imports in May 2012 for example, are consumer goods such as maize ($66 million), cooking oil ($67 million) and wheat flour ($25 million). With the right environment we could produce these,” he said.
Analysts say although the government launched the Industrial Development Policy and National Trade Policy in March this year, which will run from 2012 to 2016, nothing concrete has been done.
The policy, which seeks to transform Zimbabwe from a producer of primary goods into a producer of processed value-added goods for both domestic and export markets, has failed to jump start the local industry.
It plans to increase capacity utilisation in the manufacturing sector to 80 percent by 2015 from the current 57 percent and ensure that the sector contributes at least 30 percent to the Gross Domestic Product.
Under the plan, the sector’s contribution to exports is envisaged to rise to 50 percent in 2016 from 26 percent currently.
The ZimTrade manager noted that the local industry must adopt technologies that help them produce quality products competitively.
“There is need to recapitalise and invest in latest and more efficient technology. On the other hand sectors with growth potential can be protected against cheap imports for a limited period. Zimbabwe Revenue Authority (Zimra) must also tighten the borders to reduce the influx of substandard products,” he said.
On its part ZimTrade is involved in capacity building local industry through its Export Marketing Training Programme. The programme empowers business people with the requisite skills needed to penetrate export markets. ZimTrade also conducts various export market development and penetration activities such as trade fairs, solo exhibitions, seminars and market researches.
“This year we successfully advocated for the reduction of the cost of export documents for example Certificates of Origin Forms and CD1 Forms. ZimTrade now sells Certificate of Origin Forms at $1 from $10.
We are advocating for other organisations to also reduce the selling price of these documents,” said Tupiri.
As a result of ZimTrade’s exposé of the high prices being charged by different institutions, the Reserve Bank of Zimbabwe issued out a statement stipulating $5 as the recommended price for a CD1 Form.
ZimTrade also disseminates weekly export opportunities and trade information to business.