A welcome renaissance for local industry

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The Sunday Mail

Debra Matabvu

ZIMBABWEENS’ insatiable appetite for imported goods is well documented.

The appetite was so voracious that at one point the country spent $105 million a year importing chewing gum, toothpicks and diapers.

Local industries have suffered.

Capacity utilization in the industry has fallen to record lows, with goods from South Africa, Mozambique and Zambia flooding local stores.

However, after four years of aggressive reform, the picture has changed dramatically.

Local industry is rebounding.

The local manufacturing sector seems to have taken over and most shops are full of local products.

President Mnangagwa recently noted this monumental progress in engineering a rapid turnaround in fortunes for the manufacturing sector.

Addressing the Buy Zimbabwe 2022 Public Procurement Conference, President Mnangagwa said: “It is gratifying to note that the various economic reforms championed by my administration, coupled with the concerted efforts of organizations such as the Buy Zimbabwe Trust, have seen locally produced goods now dominate shelf spaces.

To consolidate the emerging trend, he said, the government will continue to “promote a favorable business environment and provide necessary support to increase capacity utilization in our country’s manufacturing sector.”

More than 80% of products retailed in stores are made locally, which is a significant increase from 35% “a few years ago”.

Experts say the rapid recovery is the result of a coordinated program of import substitution.

A recent sector survey commissioned by the Confederation of Zimbabwe Industries (CZI) concluded that capacity utilization in the manufacturing sector rose to 56.5% in 2021 from 47% the previous year.

Industry capacity utilization has since risen to 66.6%.

Experts have cited factors such as the improved availability of foreign currency through the Reserve Bank of Zimbabwe (RBZ) auction, the closure of land borders during the Covid-19-induced shutdowns and a power supply. reliable electricity as the main drivers of this embryonic growth.

Vibrant

Buy Zimbabwe Chairman, Mr. Munyaradzi Hwengwere, said the expansion was also driven by growth in the agriculture and mining sectors, two central anchors of the economy.

“Basically, our economy is on the right track as there is an increase in productivity in the two key sectors – agriculture and mining,” he said.

“The bumper crops we’ve had over the past two years are fueling our manufacturing sector.

“So that means that the whole value chain, that is, wholesalers and retailers, also feeds on local products.”

He added, “These are truly exciting times for our country and as Buy Zimbabwe we are happy that what we have always stood for is now in motion.”

CZI Chairman Mr. Kurai Matsheza praised the government for putting in place “the right framework”.

He said the authorities must continue to invest in infrastructure to ensure that capacity utilization continues to grow.

“There is a need to continuously and constantly disburse foreign currency so that we don’t stop producing and lose skilled workers,” he said.

“We must also continue to invest in infrastructure such as electricity and roads so that we do not face challenges.”

Solid demand

Financial data from the country’s major retailers show that demand for retail goods was still strong.

OK Zimbabwe said its outlets were “sufficiently stocked”, while sales volumes increased by 22.7% in the 2021 financial year.

During the same period, Delta Beverages said increased economic activity boosted demand for its products and sales volumes.

“Aggregate demand remains firm despite the impact of Covid-19, driven by the success of the 2021 agricultural season, increased mining production and firm commodity prices and spending on infrastructure projects” , the statement reads in part.

Data from the Ministry of Industry and Commerce shows an increase in production in the sectors of clothing, textiles, food, non-metallic minerals (bricks and cement), pharmaceuticals, paper, printing and publishing between 2018 and 2020.

A quick survey of major food retail stores last week indicated that local brands such as Blue Ribbon, Gloria and Red Seal dominate the flour sections, while Puredrop, ZimGold and Raha have the bulk of the products in cooking oil sections.

Probrands, National Foods and Mega brands dominate the rice and pasta sections, while Tanganda dominates teas.

Locally produced washing powders, bath soaps, biscuits, breakfast cereals, tissues and juices also emerge as strong competition for imported brands.

Job creation

Above all, increased capacity utilization translates into increased job creation.

Figures from the National Social Security Authority (NSSA) highlight that 479,709 new workers were registered with the statutory social security agency from January 2018 to May 2022.

In 2018, 20,640 new workers registered with the NSSA, while an additional 242,998 workers were registered the following year.

New registrants stood at 78,409 in 2020 before rising to 121,145 in 2021.

By May this year, 16,517 additional new workers had been registered.

Export boom

Significant growth in export volumes and revenue was also recorded.

According to ZimTrade, the country recorded export growth of 39% between January and April this year, compared to the same period last year.

Sugar export earnings increased from US$1.4 million in the first quarter of last year to US$8.2 million in the same period this year.

Baked goods export earnings increased from US$1.8 million to US$2.2 million during the same period.

Leather and leather goods exports increased by 35.5% from US$626,000 to US$849,000 during the review period.

Hides and skins exports also increased by 44.67%, from $4 million between January and April last year to $5.8 million in the same period this year.

Exports of the packaging and stationery sector recorded a huge jump during the review period, from US$2.4 million in April 2021 to US$5.7 million in 2022.

ZimTrade noted that an overwhelming percentage of imports consisted of raw materials and machinery to boost local production.

Headwinds

Mr. Hwengwere, however, said the growth trajectory faces significant headwinds due to unreasonable prices for locally produced goods.

“If we overprice our products, people may be forced to continue to view imports as alternatives,” he warned.

Authorities, he said, need to develop a framework to encourage fair pricing.

“The government has purchasing power for almost 68% of local products. This makes it the biggest buyer. So the government can use this as leverage to come up with a framework that brings fairness in pricing. »

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