They don’t give a damn
THE Import Substitution and Value Addition Expo ended last week in Harare with government and the central bank promising to support local industry to produce goods that would see the country saving on foreig
n currency. There was the usual pontification about the resilience of local industry in the face of adversity.
The duplicity of government with regards to protecting local industry from cheap imports should not go unchallenged. In fact, the biggest threat to the policy of import substitution has been inconsistent government policies regarding local industries. Reserve Bank governor Gideon Gono in May last year tried to promote the concept through his “Buy Zimbabwe Campaign” in which he said Zimbabwe missed opportunities for growth by failing to expand industry and cut back on imports.
“An aggressive import substitution drive, spearheaded through aggressive marketing and promotion of local brands with significant local content in terms of manufacturing and packaging effort, would go a long way in positively restructuring the economy’s consumption patterns,” Gono said in a supplement to his monetary policy statement.
He added: “It cannot be over-emphasised that any policy that encourages consumption of locally produced commodities will increase industrial capacity utilisation significantly towards the targeted 100% mark.”
To date, we are yet to see any movement on that front. In fact, Zimbabweans today are buying more foreign-manufactured products than they were in 2005 as industry has continued to shrink. The average household in Zimbabwe today is using imported cooking oil, soap, toothpaste, candles, matches and other basket goods which Zimbabwe has traditionally manufactured.
In most instances, even when the locally-made basket goods are available, they are much more expensive than imported substitutes. Our industry has lost all competitiveness and this is reflective of the difficulties the country is experiencing in exporting local products.
The major reason for this anomaly is found in monetary policy pronouncements that are out of sync with prudent economic thinking.
Zimbabwe’s economy is agro-based hence no export substitution can take place without optimum production on the farms. RBZ statistics to hand show that in 2000 Zimbabwe spent US$61,7 million importing food and that figure has been rising steadily over the years to US$334 million last year.
There has also been a marked rise in the national import bill for chemicals largely because of maize imports. This can be attributed to importation of fertiliser.
The two examples of food and chemicals point to our tragedy.
Zimbabwe has moved from a net exporter of food to a net importer. The country has also become a net importer of fertiliser even though it has world-class chemical companies.
This is the area where import substitution is required because the country is haemorrhaging from food imports instead of earning foreign currency from agro exports. There is also another worrying trend which has seen the central bank becoming a major player on behalf of government in the importation of plant and machinery at the expense of agro-dealers who are franchise holders for reputable brands.
This participation in the importation of capital equipment has seen state-owned transporter Zupco importing buses from China and Kenya when local manufacturers could have produced better products at a cheaper price.
Local shoe and textiles industries have been hurting from the loss of their market to cheap imports from China. Remember Cone Textiles? While active industrial policy to promote import substitution should involve state support to orchestrate production of strategic substitutes, protective barriers and a monetary policy that spurs production and enhances export competitiveness, the current initiatives have failed. Or perhaps government does not after all care, especially when we consider deputy Industry minister Phineas Chihota’s statement at a pre-budget seminar in Bulawayo last month.
We now know from him that: “Even if an individual or company goes to China to purchase shoes which last for one day, we don’t care because that’s not government’s business.” So the “Buy Zimbabwe Campaign” was not government policy? Whatever the case, one thing is clear: they don’t give a damn!