The Sunday News
LAFA elihle as the Ndebele word says can epitomised by how Bulawayo has fallen from its glory days of being the industrial hub of Zimbabwe, boasting of a large manufacturing sector, diversified foundries and iron and steel industries, the great National Railways of Zimbabwe (NRZ) which employed over 12 000 people. The city used to also boast of abattoirs and ranches of the Cold Storage Commission now Cold Storage Company (CSC), not to mention the rich textile industries dominated by the David Whiteheads, towel maker — Merlin, Archer Clothing, Security Mills to mention but a few of the industries that led the city to be named Kontuthu Ziyathunqa with its 24-hour boilers and electricity plants, which powered the whole industrial maze that Bulawayo was. All this is now history but where did the cogs fall off and can this be revived?
Bulawayo the industrial capital of Zimbabwe
The manufacturing sector is the central driver of growth in many countries. It assumes a key role in the growth process because of its ability to generate spill-overs, technical progress, economies of scale, induced productivity of the economy In addition, the manufacturing sector in Zimbabwe has traditionally been a key driver of economic growth, contributing significantly to Gross Domestic Product (GDP), export receipts and employment, it was the biggest contributor to GDP between 1980 and 1990 at 22 percent, followed by agriculture at 14 percent (Confederation of Zimbabwe Industries, 2009). Moreover, it has significant backward and forward linkages with other key sectors of the economy, such as agriculture. The evolution of the manufacturing industry in Zimbabwe can be traced back to the 1940s when the country had a relatively sophisticated industrial base ranging from the only integrated iron and steel plant in sub-Saharan Africa that is Ziscosteel to basic consumer goods industries. Furthermore, about seven percent of the labour force was derived from the manufacturing sector. Import substitution industrialisation was first pursued during the 1940s and continued during the Federation of Rhodesia and Nyasaland (1953-1963) and the period of Unilateral Declaration of Independence (UDI) (1965-1979). The Federation resulted in the creation of an enlarged common market. Furthermore, UDI resulted in the imposition of an embargo on the country, causing the Government to adopt an import substitution industrialisation strategy, further deepening and diversifying the manufacturing sector. The State played an active role by introducing a centralised foreign exchange allocation system, an advanced system of parastatals and state-owned enterprises and subsidies. In addition, a bilateral agreement with South Africa in 1964 provided the basis for sanctions busting as well as the generation of much needed foreign currency. By 1980 the manufacturing sector’s share of GDP had grown to 25 percent from 17 percent in 1965.
An unsustainable policy mix
While the first decade of independence started off promisingly, with Government adopting the aptly titled policy of Growth with Equity in 1981, failure to achieve robust growth during that decade meant that the commendable social programmes pursued (especially in education and health) could not be sustained into the 1990s.
During this period, investment levels remained depressed, resulting in stunted growth, increased unemployment and other social deficits. Following the boom of 1979-1981, only in 1985 and 1987-1990 was there real per capita GDP growth. The years 1982-1984 and 1986-1987 witnessed negative per capita growth (in 1984 and 1987, of minus four percent) and 1992 showed an enormous per capita GDP loss of 11 percent followed by a paltry, uneven recovery. The most conspicuous symptom of stagnation is the incessant decline in the percentage of the population of formally employed which was 50 percent in 1990, as 200 000 young people were discharged from schools and colleges yet they looked forward to job creation of 20 000 in a good year.
The Government deficit thus typically exceeded 10 percent of expenditures. Government debt repayment to foreign creditors rose from four percent of export earnings in 1980 to an excruciating peak of 35 percent in 1987 with inflation averaging 15 percent during the 1980s.
By the time CZI began doing quarterly surveys in late 1984, capacity utilization rates were down to 75 percent and they fell to as low as 62 percent in 1987. With the heavy unemployment burden, which was now becoming a ‘ticking time bomb’, a consensus eventually developed among the country’s elites under heavy pressure from international financial institutions(IFIs) that the only means of defusing it was the ‘diametrically opposite’ programme in the form of the draconian, Economic Structural Adjustment Programme which was applied from 1990.
Predictably, the Esap programme failed to revive the economy and address the social deficits that emanated from the structural deformity inherent in a dual and enclave economy. Esap maintained the bias in favour of the formal sector, meaning that the majority of the people locked in the non-formal sector where economic activities were of a survivalist mode actually grew.
Not surprisingly therefore, the number of households living in poverty increased from 40,4 percent in 1990/91 to 63,3 percent in 1995/96. The World Bank aptly observed and concluded that’ Esap entailed considerable pain but little visible gain’ (World Bank 1995).
On the policy making front, the third decade generally characterised policy making under turmoil and uncertainty. The period experienced a socio-politico-economic meltdown whose peak year was 2008. The period also saw Government shifting to the fast track land reform, a process that received mixed reviews within and outside the country. This was followed by numerous amendments to the Land Acquisition Act to accommodate the new socio-political developments.
Drawing from the background of colonial black marginalization in almost every sector in the economy, Government later came up with the indigenisation Policy’s main provisions state that every existing business with an asset value of US$500 000 or more, whether foreign or domestic, has to submit completed official forms describing the business and showing its plan for ensuring that, within five years, indigenous Zimbabweans will own at least 51 percent of the shares.
The rationale behind the promulgation of the policy was to empower black populations which were disadvantaged in the colonial era, to give them a chance to partake in the national economy through owning businesses and generally increasing their stake in the corporate sector.
The strength of this policy was therefore premised on the nobility of the cause that gave impetus to its creation. This sunny side is however, counterbalanced by an equally controversial and highly contentious side. Controversies have risen from the very contents of the policy, as well as the implications thereof. The law has since been set aside by the new Government.
In my next articles I will then look at some of the industries that thrived in Bulawayo, why they succeeded and then in my final installments I will then look at what can be done to take Bulawayo to its former glory days.
ν Nkosi Ndlovu can be contacted on 0747834432 /0843022972.