The Sunday News
Limukani Ncube
AWARD-winning business executive and Chief Executive of United Refineries Limited, Mr Busisa Moyo has been one of the leading lights in giving fair and constructive comment on Zimbabwe’s economic issues on social media.
While some were busy pointing fingers at every direction in as far as the source of the economic challenges facing the country is concerned, Mr Moyo has been seeking to point out what could be the solution.
He has been unequivocal in suggesting that the answer to the country’s economy is resuscitating the manufacturing sector as well as the agricultural sector to produce enough to meet local demand.
“Let’s get our arguments on food products correctly. Our real problem is not a shortage of foreign currency. It’s low productivity in agriculture (for soya oil production). Last year 60,000mt vs 400,000mt installed capacity (demand requirement is 240,000mt). Foreign currency is needed when you haven’t grown but want to still eat and enjoy,” he said on microblogging site Twitter last week.
In addition, in an advert where United Refineries Limited clarified that it had not increased prices for cooking oil, the company added: “Furthermore, in a bid to reduce the forex component in our operations, we are inviting farmers to join our Soya Bean Out Grower Alliance (SOBOA) programme to expand the hectarage under soya for the coming agricultural season supported by various banks and input providers.
We have applied for 20 000 hectares of land near a viable water source (perennial river, dam or aquifer) for Joint Venture Farming from the Ministry of Lands, Agriculture, Water and Rural Settlements as an import substitution measure.”
The low production in the agriculture sector in this instance was referring to ingredients needed to produce cooking oil, thus United Refineries Limited has embarked on an ambitious programme to make sure that the country produces enough and measures up to other areas that did extremely well under the Command Agriculture programme initiated by the Government.
Mr Moyo is on record as saying four financial institutions have committed to partnering United Refineries Limited to fund its soya bean out growers’ project as it forges ahead to satisfy its demand for the edible oil seed.
“As URL, we are giving an opportunity to farmers with at least 10 hectares of land to partner us to grow soya beans under our SOBOA. We will assist with a letter of guaranteed uptake plus help farmers to access finance from banks on a case by case basis. CBZ, FBC, Agribank and ZB Bank have so far come forward,” said Mr Moyo. He said the initiative guaranteed off taker for their produce, access to training services in soya bean growing and inputs.
“We are preparing for the coming planting season and we are targeting a minimum of 7 500 hectares, we are compiling the list of legible farmers. This initiative will lead to import substitution, which will see a reduction in the import bill of circa (approximately) $250 million per year for soya bean crude oil, soya meal and other value chain products linked to low soya output,” said Mr Moyo.
President Mnangagwa has said the country should focus on value addition and beneficiation to boost local industry, create more employment and boost foreign currency earnings. The President is on record as saying viable industrialisation strategies were fundamental for value addition and beneficiation of the natural and home-grown resources.
The idea of improving production in local companies and embarking on value addition and beneficiation could thus be the masterstroke for the country’s economic turnaround. Moreover, industrial production capacity utilisation has increased significantly across all productive sectors, amid indications the manufacturing sector is operating at 20 percent above the same period last year. The move is mainly driven by the benefits of Statutory Instrument 122 of 2017 (formerly SI64 of 2016), which restricts the importation of products that can be locally made.
This was revealed by Industry and Commerce Minister Nqobizitha Mangaliso Ndlovu after a tour of five companies; Best Fruit Processors, Dandy, Wilsons Furniture, Central African Batteries (formerly Lucas Batteries) and Hastt Zimbabwe in Norton recently.
“What I have seen here in Norton leaves me in no doubt that indeed the 2030 middle class economy is possible. Indeed, capacity utilisation is increasing. We wish to be there for the companies; we wish to be a listening Government as the President (Emmerson Mnangagwa) has proclaimed. We wish to be able to respond to the challenges they are facing. What I saw in those companies and the impact they are having with farmers, shows that they are actually increasing production and employment is rising.”
Best Fruit Processors CEO Mr Asere Shumba, told Minister Ndlovu that they have capacity to supply the local market with fruit paste but were hard done by imports. He said considering the quality of tomato yields — which are rising — they were considering to export and a team has been dispatched into the region to explore opportunities. Continued imports of tomato paste is now affecting the uptake of tomatoes from farmers who were contracted by the company since 2015, he added.
There are further good stories at Turnall, Delta, and in Bulawayo, companies like Archer and Datlabs are showing steady progress. Paramount Garments managing director Mr Jeremy Youmans said last month and early this month potential clients from Canada and the European Union (EU) visited the company’s factories in Harare and Bulawayo on a feasibility study mission with the aim of facilitating trade agreements with the firm.
Leading pharmaceutical manufacturer and distributor, Datlabs has invested more than $1 million towards upgrading its factory. Datlabs chief executive officer Mr Todd Moyo said the company was at an advanced stage of completing its refurbishment work.
The Government has also created a favourable environment for domestic and foreign investment.
“The new political dispensation has indicated that Zimbabwe is open for business. Several policy changes have been made to promote the coming in of investment into the country by creating an all business friendly environment. There has been removal of some of the investment impediments particularly the Indigenisation and Economic Empowerment Act,” said the president of the Confederation of Zimbabwe Industries, Mr Sifelani Jabangwe, at the organisation’s annual congress and international investment forum in Bulawayo recently.
Through the Finance Bill, the Government has amended the Indigenisation and Economic Empowerment Act restricting the 51/49 percent threshold to diamonds and platinum sectors only. This means the 51/49 threshold is no longer applicable to the rest of the extractive sector, nor will it apply to other sectors of the economy that are now open to any investor regardless of nationality, he explained.
Economic commentators in the continent have argued that value addition is not economically exploited in Africa, making it difficult for the continent to grow.
“Why is Africa, endowed with vast natural resources, still struggling to feed its people? The answer to this is loud and clear — Africa relies majorly on exporting its raw materials only to buy them back in the form of finished products. To beat the perpetual poverty, African countries need to invest in creating industries, building up skills and technologies aimed at producing high-quality products for export as well as local use. By industrialisation, the nations are also able to address the challenge of jobs, thus creating income for their people. African leaders have vigorously stressed the need for the region to industrialise with an aim of adding value to natural resources or beneficiation as it is called. The notion has been captured in Africa’s Development Agenda 2063, which singles out beneficiation as one of the key priorities for the continent,” reads part of an online article by The African Exponent Weekly.
To make industrialisation a reality, Dr John O Kakonge, a senior consultant and advisor in sustainable development, told the African Exponent Weekly that to achieve the much needed structural transformation, “value must be added to Africa’s commodities, and specific industrial policies and programmes such as regional value chains are of key importance.”
By putting more emphasis on local production, value addition and beneficiation, the country will be in a positon to bridge its trade deficit and reap the benefits of regional integration.
Regional integration in theory, according to economists is a good concept that leads to the expansion and creation of new markets, increasing competitiveness leading to efficiency as well as coming in of new technologies. With increased local production in the manufacturing sector across board, cries for foreign currency and arbitrary price increases will be a thing of the past.
