EDITORIAL COMMENT: Local industry must prepare for AfCFTA

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The herald

The Buy Zimbabwe-Buy Local summit in Harare is important to build on national policies set by the government to promote local content and perhaps most importantly, to produce more products from local raw materials.

And all development must be done, as Vice President Constantino Chiwenga noted, in light of Africa’s growing economic integration through the African Continental Free Trade Area which will require Zimbabwean industrialists to they are able to compete on quality and price across the continent.

Much of Zimbabwe’s industry is destined for local consumption under local substitution policies. This is not a bad way to start and grow an industry, but don’t create, without serious conscious effort, industries and brands that can sell outside the country.

Currently, Zimbabwe’s exports are largely primary products, things that we extract and things that we grow. There is now some added value before we export, but in general we don’t export the things we make.

On the other hand, our industry is a mixture of a number of business concepts. There are things that we make from our raw materials, or at least a large part or potentially.

Much of the agricultural industry falls into this category, where millers transform Zimbabwe’s maize and wheat into flour and flour, and Zimbabwe’s oilseeds into cooking oil. Where there are imports, it is because there are not enough locally grown produce, but a series of government programs are now in place to have almost all of the local raw materials.

At the other extreme, there are companies that use virtually no local material, essentially importing a range of chemicals and other materials and mixing them locally.

These industries were created primarily to save foreign exchange during a time when it was tightly rationed, rather than to take advantage of Zimbabwe’s advantages, and may well be the most vulnerable to external competition when the AfCFTA becomes a reality. functional.

In between are companies that use local materials and would like to use more of them. The problem of the low level of primary heavy industry, like steel mills and chemical plants, is perhaps the main bottleneck here.

Government investment policy is changing this, with two Chinese steel companies now on track to reintroduce steelmaking in Zimbabwe, with a range of core steel products from roof sheets. .

One part is intended for export and another is designed as a raw material for a much wider range of local industries. The chemical industry is expanding to start producing more fertilizer, but the type of mining and other sourcing programs mean other things can be manufactured as well.

Ultimately, any natural gas or oil found in Muzarabani will likely be much more valuable as a feedstock for a chemical industry than as gasoline or diesel, in light of global movements to accelerate the shift from internal combustion engines to electric vehicles. .

It is these industries, and those that will use their initial products, that will provide the bulk of Zimbabwe’s manufactured exports since they will have high percentages of Zimbabwean materials, which means that the focus should be on quality and manufacturing. price, rather than staying high and dry when the original source of the imported materials can send the finished products to a free trade zone.

There is also a range of industries where exports are likely to be minimal although most of the raw materials are local. It can start with one of our oldest industrial companies, Delta. This business started when a Cape brewer noted that it would be much cheaper and easier to send all the raw material for beer north by rail and then brew the beer in Zimbabwe using Zimbabwean water. For a product composed, by weight, of about 95% water, this made sense.

Over time, most of the material could be grown in Zimbabwe, so the only import now is hops, experiments determined enough to grow them locally in the Zimbabwe closest to a temperate climate in Nyanga does not work. not.

But there are a lot of these other global or regional brands where local production, most of the inputs being local, is made here and many more can follow.

Even with the AfCFTA, there will be giant mainland companies that will find it easier to have a spread of factories rather than truck everything everywhere. It is an opening that must be explored. But the future stars of manufacturing will be the companies that export and have a high percentage of local raw materials. They must start to think big.

They have to push their brands and use the few years that they have some local protection to build those brands and achieve the quality that modern consumers demand and demand.

The last quarter of a century has seen the upheaval of these local manufacturers who have not insisted on quality and price.

They had grown up in a protected environment, totally protected most of the time because all foreign exchange allocations were centralized, and had grown into the habit of producing without worrying about quality on the grounds that Zimbabweans had to buy or do without. .

The opening up of the economy showed how much of a mistake this was, even though the desperate desire for imports that followed was often irrational.

The reintroduction of the local currency and other government measures have seen the resurgence of many industries, but the new industrialists know they won because they had the quality and the price to fend off imports.

These were difficult lessons, and they must be studied continuously as we go along.

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