The Sunday News
Preamble:
THE Ministry of Industry and Commerce Permanent Secretary, Abigal Shonhiwa, has suggested that Zimbabwe’s industrial capacity utilisation is projected to reach 50 percent by 2021. According to the Permanent Secretary the manufacturing industry is currently operating at 34 percent of its installed capacity.
The manufacturing sector’s contribution is expected to increase to at least 18 percent in 2021, capacity utilisation is expected to increase to at least 50 percent and annual growth rate in the manufacturing sector is expected to grow at least 1,5 percent during the lifespan of this policy, she said.
The Secretary was referring to the Industrial Development Policy (2017-2021). “The policy is expected to facilitate development of the Zimbabwean industry to become a significant contributor to Gross Domestic Product (GDP), exports and Government revenues and create opportunities that attract both local and foreign direct investments in the different sectors of the economy,” she said.
She added that the Industrial Development Policy framework is expected to revive and give a new lease of life to the Zimbabwean industry.
“You will note from the consultation’s presentation that this time around the policy targets have been made as realistic as possible given that the policy targets set in Industrial Development Policy (IDP) for 2012-2016 were to a large extent not met because most of them were too ambitious and had not been set within the context of the current economic environment. The goal this time is to set achievable targets, taking into cognisance the prevailing environment,” she said. The policy is however, still at consultation stage.
The pronouncement follows a similar proclamation that was made in September 2015. By then the nation was told that the Government was working on ensuring that the manufacturing sector contributes 30 percent to the national GDP by 2016 as it was prescribed in the IDP framework that covered the period 2012 to 2016.
Addressing the Small to Medium Enterprises (SMEs) at the breakfast meeting that was organised by FBC Bank and SMEs in September 2015 the director of Enterprise Development in the Ministry of Industry and Commerce outlined the key objectives of the 2012-2016 Industrial Development Policy, that were:
To restore the manufacturing sector’s contribution to the country’s GDP from the 15 percent that was obtaining in 2015 to 30 percent.
To increase exports from 26 to 50 percent by 2016.
The other objective was to create additional employment in the manufacturing sector on an incremental basis and to reduce unemployment levels in 2016.
The policy was also meant to strengthen the existing stakeholder institutions such as Scientific and Industrial Research and Development Center (SIRDC), Standard Association of Zimbabwe, ZimTrade, Competition and Tariff Commission (CTC) and the Consumer Council of Zimbabwe (CCZ).
To co-ordinate the crucial role of modernising industry’s plant and equipment and to improve on its systems and quality of products in line with international best practices.
It was at this breakfast meeting when the Enterprise Development director in the Ministry of Industry and Commerce, Mrs Florence Makombe acknowledged that the Industrial Development Policy for 2012-2016 had failed to achieve a number of objectives and at that time the Government had started working on the 2017-2021 Industrial Development Policy which is meant to cover those objectives that will bring change to the industrial sector. The new Industrial Development Policy envisages transforming the country’s economy from a producer of primary goods, that is, commodities into a producer of processed value added goods for both the domestic and export markets through the promotion of viable industrial and commercial sectors. That is, creating a vibrant, self-sustaining and competitive economy.
Speaking during the same week of the SMEs workshop organised by FBC and SMEs in 2015 the senior economist in the Ministry of Industry and Commerce Kelvin Mutede told the delegates that the 2017-2021 Industrial Development Policy will provide guidelines for a new impetus for industrialisation in Zimbabwe and will target an average gross domestic product growth of seven percent. Mutede said the ministry would seek the establishment of a dedicated financial mechanism primarily dedicated to financing medium and long-term recapitalisation of industry. “The mission is to create a vibrant, self-sustaining and competitive economy through promotion of viable industrial and commercial sectors as well as domestic and international trade,” Mutede said.
According to Mutede, the key principles of the 2017-2021 Industrial Development Policy are plant, equipment and skills audit, import substitution, value-addition or beneficiation, technology transfer and research and development, and exports of value-added products. He said government would strengthen existing institutions such as SIRDC, SAZ, ZimTrade, Competition and the CTC, CCZ and national competitiveness. This will be done in an effort to co-ordinate the crucial role of modernising industry’s plant and equipment and to improve on its systems and quality of products in line with international best practice, the economist narrated.
Some of the strategies to be used will also include the provision of funds to Distressed Strategic Companies, review of import tariffs on the customs duty and value-added tax on industrial raw materials and packaging, and formulation of a sound National Trade Policy to support the Industrial Development Policy. The Ministry of Industry and Commerce will also take Spatial Development Initiatives to unlock latent economic potential in specific geographical areas and facilitate the Special Economic Zones in line with the Mid-Year Fiscal Policy Review under the new proposed Industrial Development Policy 2017-2021. Mutede reiterated that the formalisation of the new Industrial Development Policy for the period 2017-2021 will be signed and completed soon.
The underlying basis for the development of a sustainable Industrial Development Policy
It is a general practice worldwide that Industrial Development Policies are crafted on five-year time bound basis. The logic behind this approach is simply that the five-year period allows for both implementation, monitoring and evaluation of the policy to make sure that what is set out to be achieved is achieved.
What is disturbing and very clear from the assessment of the performance of the 2012-2016 Industrial Development Policy by the officials of the Ministry of Industry and Commerce highlighted above is evidence of the laissez-faire attitude, that is, the policy of leaving things to take their own course, without interference and lack of will by the planners and managers of our economy.
I strongly believe that with the right mindset and will, most of the objectives of the 2012-2016 Industrial Development Policy could have been achieved. It is against this background that a lot of doubt is cast on the achievement of the 50 percent manufacturing capacity by 2021, unless there is going to be seriousness on what we are setting ourselves to achieve in the light of economic deterioration and challenges that the country is facing. Otherwise come 2020 we will be lamenting over the failure of the policy again. It is very clear what is to be accomplished in this proposed policy.
However, as long as we are still stuck in the old school of thought that we can do it on our own without the rest of the world in terms of FDI, we may as well forget about everything to our own peril. Like I have always said and other analysts have said, Zimbabwe needs the rest of the world like any other country.
Now that the new policy is still at consultation stages there is need to first take stock of Zimbabwe’s historical industrialisation record, policies and strategies with a view to discerning niches and pre-requisites for nurturing and leap-frogging to a semi-industrialised economy, that is, by moving away from the current primary or commodities driven economy.
This has to involve a comprehensive economic analysis to inform the identification and sequencing of particular industries and sub-sectors that should be prioritised in the new proposed Industrial Development Policy of 2017-2021. The second area to be focused on is the identification of clear measurable targets for this five-year plan.
In conclusion, allowing the current or prevailing economic situation to dictate our planning philosophy on its own creates a problem and a limitation, notwithstanding the need for our policies and plans to be realistic. As long as we are not planning to come out of the economic doldrums as quickly as possible, then that’s a recipe for disaster.
We need to plan for the economy to be robust once again, self-sustaining and competitive. That can not be achieved with that mentality of according too much respect of the current and prevailing economic situation. Instead it is the current and prevailing economic situation that we should be planning to change and reverse its direction.
Dr Bongani Ngwenya is a Bulawayo-based economist and senior lecturer at Solusi University’s Post-Graduate School of Business. Mailto:[email protected]/[email protected]
