RECENTLY there have been growing calls by the Buy Zimbabwe campaign encouraging Zimbabweans to buy products made and grown in Zimbabwe. Today as unemployment hits record high, the merits of the campaign are easy to comprehend.
Daniel Ngwira,Chartered accountant
Despite the gallantry of the campaign, it has failed to ignite the momentum it deserves. Dozens of high profile businessmen and executives as well as institutions have thrown their weight behind the campaign, but in vain.
The campaign, if successful, will result in job creation in all sectors of the economy; from the manufacturing to the knowledge and service industries. But for this to happen, it takes all the three pillars of the economy to pull together and to coexist; government, business and labour. Buy local is a phenomenon which any government and its people anywhere in the world would cherish. In 2013, Walmart launched a US$50 billion “Buy American Campaign”. Walmart US CEO Bill Simon put forward a vision for reviving the US economy. The plan was to create more than 100 000 jobs and boosting consumer spending on a 10-year horizon. This was despite that the company was already spending two thirds of what she bought on US grown or made goods.
There is no doubt that buying local entails greater flexibility due to shorter lead and transportation times as well as a reduction in freight charges. Even the just in time strategy, which cuts off unnecessary warehousing costs become possible. Walmart did set itself a 10-year horizon inorder to manage the transition, unwind contracts or allow others to expire and to avoid costly business disruption associated with abruptness.
It should be recognised that citizens and a country’s residents may like to buy local on condition the quality is right and they do not pay more than they were paying on imported products. In addition, supply and availability of goods need to be guaranteed. This needs to be reconciled with the complexity of the modern supply chains where goods can be made with inputs sourced from other countries. Buying local does not entail cutting off necessary imports. This ensures that the role of the global village concept is respected. As long as competitiveness is achieved, trading partners would have no grounds for erecting barriers to trade.
The “Buy Zimbabwe” campaign is not a new phenomenon. This campaign was once emphatically embarked upon in the 90s. The lead campaigners are thus encouraged to revisit how the campaign was done so that as a nation we have the advantages of a carry over. This will go a long way in managing the pitfalls we encountered at the time. Suffice to say the environment has changed significantly.
For this campaign to bear fruit, all stakeholders must either be involved or must involve themselves. My simple economic definition of this campaign is ‘economic patriotism to goods and services produced within or by one’s own country.’ In our mind we could simply say “proudly Zimbabwean.” South African products carry the country’s flag and the motto “proudly South African.” Faced with a choice between two goods; one made locally and the other one imported, one would have to choose the locally made one. There are issues which need to be addressed, though, for this to happen. Money in one’s pocket has no patriotism. If one follows patriotism and they buy a product that is more expensive, they will soon have no money to buy anything.
In 1990, Michael Porter propounded a theory that he called the ‘Porter’s Diamond.’ In this theory, he argues that there are four features that shape the environment in which domestic companies compete. These characteristics named as firm strategy, structure, and rivalry; factor endowments; related and supporting industries and demand conditions, can promote or obstruct a nation’s competitiveness on the global stage.
Looking at the Porter’s Diamond, the “Buy Zimbabwe” campaign is seen in the demand conditions. Porter argues that companies are most sensitive to the needs of their closest (geographically) consumers. If domestic consumers are demanding and sophisticated they exert pressure on companies to innovate. It is such innovation which is paramount in the creation of a nation’s competitiveness. No doubt sophisticated and demanding customers within Finland helped push Nokia to invest in cellular technology. For some, it may remain a puzzle that Nokia, coming from a country (Finland), whose language is probably least understood and complicated managed to conquer the world in terms of cellular technology. Well, the puzzle can be solved by attributing all that to domestic demand.
Domestic demand not only helps in innovation, but also in creating sufficient volume for full employment.
There is a price to this “Buy Zimbabwe” campaign. Consumers are unlikely to buy simply because a product is made in Zimbabwe. Remember, the customer is seeking satisfaction, and also spending hard earned money. The products must therefore meet the needs of the consumer including appeal and affordability for the level of the budget exposed. In all this campaign, there must not be guarantees that domestic customers will buy local. To do so would augment in killing the spirit of innovation and ultimately our nation’s competitiveness on the world stage. Elsewhere, we have seen the US consumers buying Toyota as opposed to General Motors because customers’ needs have been answered more by Toyota than GM; for example Toyota vehicles save fuel compared to most GM cars.
In addition, industry must increase capacity utilisation. There is no doubt that some high prices of local goods are emanating from the low levels of capacity utilisation. Shareholders must pay the price of injecting capital into their businesses to build capacity. I will broaden my definition of capacity utilisation to include replacing obsolete plant and equipment. If a company is fully utilising obsolete equipment, they cannot achieve price efficiencies. A lot has happened in our lost decade in terms of technological advancement. When a supplier sells off a plant, which is 30% utilised, it entails that someone is paying for the other 70%; either the customer or the shareholder or the creditors and lenders. That situation cannot be sustained. My experience in a brick manufacturing entity has taught me that when a business ramps up capacity utilisation, they have economies of scale and therefore become competitive.
It is a fact that new technology comes at a price. If we cannot afford other people’s technology, then let us build our own. This takes the bold step of investing heavily in research and development both at corporate and government levels. We have the skills (factor endowments) and so let us apply them. Government will have to play a big role in research and development. Our engineers can build machinery if they are given resources. They are already doing so with limited resources. Many people will remember Daniel Chingoma, a musician famed for a song titled My Career. He made a helicopter which he said could fly. Instead of supporting this initiative, government warned him against flying the object. While I appreciate that government was concerned about the safety of citizens, they should have gone an extra mile to support the development of this initiative. Who knows perhaps now Zimbabwe could have been making helicopters.
The power of research and development cannot be ignored. At government level, there is need to deliberately tilt education towards national objectives. While everyone has a right to study what they want, we need to encourage more science and technical subjects. We need to tilt mathematics and statistics towards national goals. This will answer the production and manufacturing side. So many people are acquiring tertiary qualifications but what is the use of having more sociologists, accountants or political scientists when there are few industries to absorb them? While we have seen steps being taken by government in the mining sector where beneficiation has been emphasised, at times a carrot is better used than a stick.We should be encouraged by China, which is expected to overtake the US in scientific research by 2020. The development of China is a message to the world that all things are possible.
Through research and development, Israel and Iran have made missiles of their own, with Iran driven by the fact that they could not be sold what they wanted because of sanctions. Out of sanctions, other countries have come with initiatives to be stronger as economies and nations while Zimbabwe mourns and lambasts the same people they want to remove the sanctions.
We have seen a level of reckless and irresponsible pricing by some economic players in this dollarised landscape.
This could work against the campaign, however, if the majority of companies price appropriately and responsibly, the reckless will either join the rest or they will ship out. In this regard private schools cannot be left out in this recklessness. We have seen schools like St Johns fighting hard to raise school fees in such a difficult economy much to the chagrin of many.
Of course at the moment, the Buy Zimbabwe campaign is more of a talk show than anything else as locally made goods are, by and large, more expensive than the imported ones. Government must make an effort to craft an enabling environment; this includes easing the cost of doing business. To be specific, government must attend to the high energy tariffs. It is unfair for Zesa to compare itself with South Africa, which is drifting towards being a first world country as well as being a vibrant economy. Councils and government related departments should play their part. The central government has a role to direct the rest of government institutions regarding coming up with investor friendly pricing and policies. For years Zimbabwe has been charging US$160 for number plates, yet Botswana charges are about $14. It is also absurd to change number plates each time a car changes ownership.
Government should also look at things like fuel costs. In Botswana, petrol costs are just under US$0,74 whereas Zimbabwe charges over US$1,30 due to government taxes. Further, there must be easy access to capital to enable retooling. At the moment, the country is battling with making cash available to depositors. This casts doubt on the likelihood of success of the buy Zimbabwe campaign as the cost of production is further driven up. The queuing time is a huge cost to the economy. This cost could be larger than the cost of a day’s stayaway if we are to compute from the time we first had the cash crisis. My colleagues in the diaspora cannot understand how a country runs out of cash because they have never seen it in Botswana, South Africa, Namibia or the United Kingdom.
The power of this campaign will be felt by all in generations to come. Through the “Buy Zimbabwe” campaign, we will employ our own. At the moment, we are employing other nations’ citizens by importing. We have seen the restlessness of neighbouring countries when government banned some imports. That shows the extent to which Zimbabwe is supporting other economies through imports. At the moment, the buy Zimbabwe campaign is not successful because the promoters including government, are focusing on advertising to convince buyers instead of addressing the fundamental issues that make people avoid buying local.
Ngwira is a chartered accountant, former bank treasurer and former university lecturer. He holds finance and business qualifications. — firstname.lastname@example.org, +267 73 113 161.