ONE of the major reasons for a critical shortage of foreign currency is the lack of a sound productive sector in the country — a situation which has seen imports outstripping exports resulting in a negative balance of trade.
A plethora of challenges affecting operations of the manufacturing sector ranging from lack of working capital, obsolete equipment, unfair competition from cheap imports, high cost of production and prohibitive costs of borrowing are well documented. Given that industries have largely been comatose for the past two decades calls for radical measures to resuscitate them — and Government must assist in this regard.
There are companies that have weathered the storm and survived in the face of adversity through a combination of astute management, cost containment and other austerity measures which ensured that they stayed afloat even when the economy was imploding. These need to be assisted to ramp up production and be competitive in the region where they can export their products.
Such companies are low hanging fruits for the Government since they have already proved their prowess by thriving in a harsh climate. United Refineries and other oil processors come to mind because they have successfully stood their ground against cooking oil imports especially from South Africa and
Government needs to ensure that they completely corner the market to reduce the import bill.
As it is, local cooking oil is dominating the supermarket shelves and any artificial shortage can be quickly corrected because warehouses at UR and other cooking oil manufacturers are well stocked. The price can be managed too as production costs are in the public domain.
There are other companies that are slowly starting to emerge from the woods after years of stagnation. Some of them simply kept a skeletal workforce during years of economic decline in the hope of resuming full scale production once conditions were conducive.
Among these are firms in the clothing industry who suffered from competition from cheap imports, the steel industry which was hit by the closure of Ziscosteel, the leather industry which also suffered the same fate as the clothing sector, the pharmaceutical industry and other sectors which used to populate the Belmont Industrial Site in Bulawayo.
Since the advent of the new dispensation with its emphasis on the economy at the expense of politics, we have seen a resurgence of industrial activity with companies keen to resume production because of the favourable conditions being created by President Mnangagwa’s administration. Such companies need all the support they can get from Government and in this regard, we urge the Ministry of Industry and Commerce to ensure that these firms are nursed back to full production.
We reported yesterday on a visit by the Deputy Minister of Industry and Commerce, Raj Modi, to two companies in Bulawayo — Masters Diapers Zimbabwe and chemical manufacturing firm — Tierra Chemicals. At Masters Diapers which has set up a $2 million diaper manufacturing plant in the city — Dep Min Modi was told that the company used to be a distributor of diapers in the country but had ventured into manufacturing due to forex shortages.
The plant has the capacity to produce 120 000 diapers a day but has been lying idle since July because the company requires at least $350 000 to kick start operations. It has appealed to the Government for assistance in acquiring the money through the Reserve Bank of Zimbabwe so that it buys critical raw materials, commissions its plant and begins production.
We strongly believe such companies deserve the ear of Government because they have already shown initiative and are critical in reducing the import bill.
Besides creating employment, they will contribute to export receipts once they satisfy local market demands.
Dep Min Modi also visited Tierra Chemicals which intends to diversify its operations to include production of detergents such as dish washer. Again, this is another local company deserving of Government assistance to increase production. Working with industry bodies such as the Confederation of Zimbabwe Industries, Government can come up with a database of companies needing assistance, find ways of sourcing money for them and help them to stand on their feet.
By prioritising the manufacturing sector, Government will increase exports, create employment, reduce the import bill, increase the tax revenue base and stimulate economic growth. The growth of industry will also contribute towards formalisation of the economy through dismantling the informal sector where most imported products are sold in an unregulated environment prone to abuse.
Granted, it will take some time to get industry firing on all cylinders but we believe there has to be a starting point. In this regard, we are glad that the Minister of Industry and Commerce, Mangaliso Ndlovu and his deputy Modi seem to have hit the ground running.
After his tour of the two companies in Bulawayo on Monday, Modi said Government was appreciative of what companies in the city were doing to remain afloat. “I think we need to do something and I urge our local community to also support what the local companies are doing. As Government we are going to support them, whatever their needs, and we will do our best for them,” he said.