EDITORIAL COMMENT: Industry revival should top new Cabinet priorities Minister Nqobizita Mangaliso Ndlovu

THE country’s economic revival hinges on attracting Foreign Direct Investment to the critical manufacturing sector which requires an injection of capital to retool, ramp up production and export its goods to generate foreign currency for the nation.

In addition to mining and agriculture, the manufacturing sector has potential to boost forex reserves and Government should prioritise its revival.

While the liquidity crisis and the need to reduce Government expenditure by trimming the civil service may appear like challenges requiring immediate attention, Zimbabwe has a huge trade deficit with other countries because it imports more than it exports — draining the little forex it is generating from tobacco, gold, platinum, diamonds and other precious minerals.

The manufacturing industry remains one sure way of resolving issues like a low revenue tax base for Government, unemployment and low exports. The Ministry of Industry and Commerce has been grappling with challenges affecting industry over the years and has made recommendations on what needs to be done to assist the sector to make a meaningful contribution to the economy.

Through organisations such as the Confederation of Zimbabwe Industries and Zimbabwe National Chamber of Commerce, Government has been able to ascertain the bottlenecks impeding companies from fulfilling their potential. CZI has projected capacity utilisation to increase to 48 percent in 2018 from 45,1percent as companies continue to invest in growing their businesses. This is promising and should be leveraged upon.

Results from last year show that a number of companies are making investments towards increasing their capacity and, with renewed interest for investment in Zimbabwe, the capacity utilisation will certainly surpass last year’s. Foreign currency allocation and impacts of rainfall patterns on the agricultural sector which in turn affects agro-processing have remained threats to the capacity utilisation and if these can be mitigated, industry experts predict that Zimbabwe’s capacity utilisation is going to be between 47percent-48 percent this year.

According to the CZI manufacturing sector survey, capacity utilisation declined to 45,1 percent in 2017 from 47,4 percent recorded in 2016 on the back of rising costs of production and foreign currency shortages, among other challenges. Other constraints blighting the sector include competition from imports, antiquated machinery, which constantly breaks down, low local demand and access to finance.

Economists believe that there is a vicious cycle that can be broken by addressing Zimbabwe’s cost structures and holistic regulatory reforms if industry is to thrive. They reckon that Zimbabwe’s cost structure should be addressed as it affects final product costs and render Zimbabwean exports uncompetitive, affecting foreign currency generation.

They also posit that agriculture and manufacturing sector policy convergence is critical while a manufacturing sector export strategy is due and efforts to retool should be doubled. There is a raging tug of war between industry and the Reserve Bank of Zimbabwe with the former clamouring for more foreign currency allocation to oil its operations while the Central bank struggles to juggle the little inflows amongst a litany of pressing commitments in the wider economy.

What is not in doubt, however, is that the country needs to get its industry firing on all cylinders to grow the economy. The new Minister of Industry and Commerce, Cde Nqobizitha Mangaliso Ndlovu and his deputy Cde Raj Modi, have their work cut out as they embark on a mission to revive industries, particularly those in the country’s erstwhile industrial hub — Bulawayo.

It helps that both gentlemen are from this side of the country with the Minister being the legislator for Bulilima East while Cde Modi is MP for Bulawayo South which incorporates the Belmont Industrial area.

Cde Modi — a businessman of note — has already fired the first shots by warning churches occupying buildings in Belmont that their days are numbered.

Minister Ndlovu has also vowed to turn around industry in Bulawayo while also embarking on a robust industrialisation policy and removing investment bottlenecks. He said transforming the living standards of citizens and providing them with decent jobs was critical towards attaining President Mnangagwa’s dream of a middle income economy by 2030. “I cannot really disclose my plans for now but I am looking forward to having a robust industrialisation policy. I will review what’s there,” said Minister Ndlovu.

“I am looking forward to coming up with policies that are investor friendly, that are friendly to industry, (and) that are friendly to the economy because our focus is really that even in the manufacturing sector, we need to see capacity utilisation going upwards of 50 (percent), 60 (percent).“If you are north of 65 (percent) then you know that even those companies are profitable.”

We welcome the zeal and energy shown by the new appointees and are confident that they will deliver on the mandate that they have been given by the President. A good starting point would be sitting down with industry and understanding their problems before forging ahead with crafting policies best suited to them.

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