The Sunday News
IN tracing the deindustrialisation of Bulawayo it is prudent to trace this economic morass from the colonial Rhodesian economy especially what the economy turned out to be after the Unilateral Declaration of Independence on 11 November 1965 and the effect of the United Nations imposed sanctions thereafter.
A study on deindustrialisation can never be truly complete because a number of facets have worked in concert to bring Bulawayo to its knees as it finds itself 34 years after the attainment of independence and some of these include, the Rhodesian sanctions, collapse of rail system, collapse of Cold Storage Company and Zimbabwe Iron and Steel Company, effects of water shortages in Bulawayo and power outages in the country.
The impact of UDI (1965) and the accompanying sanctions on Rhodesia
The British government’s method of dealing with the Rhodesian rebellion was by imposing sanctions acting in concert with the United Nations.
In 1965, Rhodesia’s economy was extremely dependent upon foreign trade and investment. Exports earned 45 percent of national income of which 34 percent was in turn spent on imports.
The country was essentially an exporter of primary products, the most important being tobacco, which constituted nearly one-third of total export value, and minerals, which comprised another 22 percent.
Rhodesia relied on imports for virtually all of its machinery, transport equipment, chemicals, and spare parts, and for all of its petroleum.
According to Rhodesia’s National Development Plan of 1965, the inflow of capital from abroad, technical skills, and management capability was absolutely crucial to the country’s economic growth.
The immediate impact of sanctions was dramatic. Between 1965 and 1966, the total value of Rhodesian exports fell by 38 percent.
By 1968 total exports were worth slightly more than half their 1965 value. Then Minister of Finance John Wrathall told the Legislative Assembly in July 1966 that: “Exports are Rhodesia’s lifeblood. Our success or failure as a nation depends on our ability to make good, by whatever means possible, the loss of the export markets which have been closed by sanctions.”
Sanctions reduced not only the volume of exports but also their value.
The regime’s covert trading partners were not willing to risk the purchase of contraband products unless they could strike a good bargain.
Thus, Rhodesia had to sell cheap and buy dear, paying extra costs at every step of the routes used to disguise the trade. Over the 14-year sanctions period, the sales discounts alone were estimated to have cost Rhodesia R$1,1billion.
The rapid deterioration in Rhodesia’s terms of trade caused serious problems. By 1973 even Prime Minister Ian Smith was forced to concede in Parliament that “we are compelled to export at a discount and import at a premium . . . This has the effect of reducing profit margins internally, and at the national level, it has an adverse effect on our balance of payments and foreign reserves”.
Rhodesia’s foreign exchange earnings declined markedly, and the Smith regime imposed stringent import controls.
Between 1965 and 1966 imports declined by 30 percent, affecting agricultural and industrial inputs, new machinery and spare parts.
Tobacco, the most vital export, was most severely damaged. Between 1965 and 1966 the volume of tobacco produced fell by one-half, its value by two-thirds.
“Sanctions disrupted our tobacco industry terribly”, asserted John Graylin, who in 1965 was chairman of the Tobacco Export Promotion Council.
“The prices fell alarmingly. We couldn’t sell it. We had a big stockpile . . . Then we started to have to sell it under the counter, but at a tremendous discount. The covert process wasn’t very profitable.”
The Government was forced to subsidise tobacco growers, paying out some R$16 million per year. By the time independence came in 1980, the tobacco industry had lost billions of dollars.
Writing for the South African Financial Mail in 1968, Ruth Weiss said of the plight of Rhodesian farmers under sanctions:
“Agriculture is the real casualty of the sanctions war”, she wrote. “The tobacco industry has suffered and will take years to recover.”
While many of the big growers survived the sanctions years, many of the smaller farmers did not.
According to a Mr H W Freeman, managing director of the Tobacco Corporation set up by the Government then to sustain the industry, there were 3 054 European tobacco producers in 1964. By 1980, only 1 544 producers remained. Scientific research, spurred by sanctions, had resulted in increased yields per acre, so that the same quantity of tobacco was produced.
But only the most prosperous and efficient farmers survived, the others abandoned farming or turned to different crops.
Agriculture, although hardest hit, was by no means the only sector affected. The motor vehicle industry was also severely damaged. Petrol rationing led to a decline in automobile sales.
New car sales dropped more than 40 percent in the first half of 1966. The number of imported vehicle kits, to be assembled in Rhodesia, was cut back severely, and the price of imported spare parts shot up.
At the end of 1966, BMC and Ford, the two largest assembly plants were producing at a rate of seven to eight units a day, one-third the 1965 rate.
Both companies had lost their export markets overnight, that is, one quarter of their total sales. By early 1967 both plants were forced to shut down.
The sanctions as shown above had the hardest effect on Bulawayo, which was the Industrial Hub of Rhodesia in that they caused quite a significant number of companies that had previously been headquartered in Bulawayo to move their head offices to the then Salisbury (Harare), so as to be closer to the regime strategists who directed the busting of sanctions.
Effect of sanctions on industrial capacity
The limited domestic market and obstacles imposed by sanctions on external trade meant that Rhodesian industries frequently did not produce enough to achieve economies of scale.
Thus their manufactures were often costly, of inferior quality, and uncompetitive internationally.
In September 1966 a Mr P C Aldridge, director of the Association of Rhodesian Industries, expressed concern at the mushrooming of backyard industries.
The reputation of established local products would be damaged, he maintained, “If supplies of shoddy or inferior goods should be finding their way to the market.”
The Financial Mail found that the white public was “restive about the quality of some of Rhodesian made goods” and unhappy about paying the higher prices (Financial Mail, 2 September 1966).
By the mid-1970s both the domestic and foreign markets were glutted. The sanctions-induced decline in export earnings meant that the country was desperately short of foreign exchange, needed either to produce capital goods or to import them. Hence, there was a serious structural limit to the growth of the manufacturing sector.
Ten years after the imposition of sanctions the Rhodesian economy had reached a plateau. Machinery was wearing out. Spare parts could not be obtained. The country was “running down its capital goods stock right across the board”, claimed Ruth Weiss, who covered Rhodesia for the Financial Mail during the early sanctions period. Far from ensuring economic growth, sanctions had made a massive holding operation necessary. The late 1970s crisis was of Great Depression-scale. From 1974 to 1978, manufacturing production declined 27 percent, capacity utilisation fell by 38 percent, and there was a net loss of 50 000 urban private sector jobs (from a peak of over 1 million in the entire national economy), mainly in manufacturing and construction.
To be continued
The writer is a political and economic commentator based in Bulawayo. You can get in touch with him at [email protected]
