A look at the ZNCC congress

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LAST week, at the invitation of the Zimbabwe National Chamber of Commerce (ZNCC), I attended as a panelist at its annual congress in the resort town of Victoria Falls — the congress ran under the theme “Expanding Horizons: Dynamic Solutions for Economic Turnaround”.

I have digested the intellectually stimulating two-day deliberations at the congress from various business stakeholders — one thing that has crystallised very well in my mind — our economic turnaround and take-off cannot have any other anchor besides agriculture.

Mining cannot do it.

The panel I was on interrogated the topic Expanding Horizons for Successful Market-Driven Economies that Support Growth, Development and Wealth in the Region. The main presenter on the topic was the guest of honour from Rwanda, Louise Kanyonga, the head of policy and strategy at the Rwanda Development Board.

My take on Kanyonga’s fresh, provocative and insightful presentation was that the kind of powerful institutional frameworks on national strategic planning, strategy implementation and accountability, that have been powering Rwanda’s Vision 2020 (and will continue to power their forthcoming Vision 2050), are still embryonic in Zimbabwe, leading to the question on how a country like Zimbabwe could experience economic turnaround in advance of enabling institutional frameworks and world-class national accountability mechanisms. I offered a private sector or citizen-led disruptive innovation perspective as one alternative for sustained economic growth and wealth creation.

Disruptive innovation or market-creating innovation is a process aimed at non-consumption (and more recently non-production) by transforming goods, services and production systems that were complex and expensive for the majority of people to make them simple, affordable and accessible to the vast majority of people.

Enter Industry and Commerce minister Mangaliso Ndlovu who was on my panel. Ndlovu unveiled the newly cabinet-endorsed Zimbabwe National Industrial Policy (ZNIP) (2019-2023), an industrial strategy and policy framework anchored on two pillars — innovation and investment. What immediately caught my attention was the 2% annual manufacturing growth target set in ZNIP.

The minister indicated that the target was in line with the rates of manufacturing growth posted by the manufacturing sector in the recent past. From a strategy viewpoint, the target set is the baseline — this is not a good way of setting targets — for a target to be of any strategic value it should exceed the baseline. In strategy, we encourage targets that are called “Big Hairy Audacious Goals” (Bhags). This is exactly how Rwanda has been setting its national Vision 2030 targets as explained by Kanyonga.

Why would Ndlovu settle for a low target for manufacturing growth?

The answer lies in a reminder that was made during the deliberations that 70% of the raw materials for our manufacturing industry used to be supplied by our local agricultural enterprises. Our Zimbabwean economic history attests to the fact that a dollar invested in agriculture would multiply itself 6 times through manufacturing — agriculture had the highest economic multiplier in this country. The issue of National Railways of Zimbabwe (NRZ)’s under-performance was tackled (NRZ chairperson Advocate Martin Dinha was on my panel). In 1980, the NRZ employed 24 000 people and this has shrivelled to about 4 000, a six times reduction, not surprisingly similar to the historical economic multiplier — it is not a coincidence. In terms of freight volumes, the NRZ, at its peak used to move 18 million tonnes a year and this has shrunken to 2,4 million tonnes a year, a 7,5 reduction, again not too far from the historic agriculture economic multiplier.

During the panel, I leased the case of Bulawayo to illustrate how the NRZ’s underperformance is largely linked to decline in agriculture. Bulawayo’s top four employers in terms of number of people employed were the NRZ, the Cold Storage Company, engineering giant Morewear Industries (the famous Zeco) and the Bulawayo City Council — these were supported largely by cattle ranching. The demise of cattle ranching destroyed the CSC and Morewear (no longer exists). This case is representative of the rest of the country — think Kadoma.

ZNIP talks of reviving industrial clusters — the now defunct Bulawayo system I have just outlined is a perfect example of a once vibrant industrial cluster anchored by agriculture.

Further to this, I made the point that Bulawayo still has most of its mines intact yet Bulawayo’s economic decline has not been stemmed by the presence of these mines. The point is straightforward; though mining is a powerful forex generator and is currently the country’s biggest forex earner (about US$3,2 billion last year), contributing about 76% of forex generated last year , it has a very weak economic multiplier in the economy. Let us take soya bean for example. Soya bean farming will support upstream industries such as seed, agrochemicals (fertilisers and sprays) and downstream industries such as stock feed, soya beverages (a wholly unexplored industry), soya extracts (including a host of unexplored food sectors crying for exploration), cooking oil, and soap manufacture. Contrast this with mining: mining in its current form or even in its value-added form has a relatively extremely weak economic multiplier as compared to farming. When ZNIP takes the low 2% manufacturing target — it is an implicit acknowledgement that our farming foundations are extremely weak.

Enter disruptive innovation in agriculture.

Since ZNIP is based on two pillars, innovation and investment — my take is that it must invest a greater focus on disruptive innovation in agriculture and local disruptive innovative financing. It was highlighted during the deliberations at the congress that prior to the land reform, 70% of our maize was produced by rural farmers and for cotton it was over 70%.

In the language of disruptive innovation, maize and cotton production succeeded because it was a disruptive innovation production system — the majority of Zimbabweans (ordinary rural households) were producers enabled by simple farming techniques and affordable financing mechanisms through the Grain Marketing Board and the Agricultural Finance Corporation (AFC) which closed its doors on December 31 1999 to make way for Agribank, birthed the following day. A very insightful analysis was done — AFC was established in 1924, about 6 years before the Land Apportionment Act of 1930 — the point being that the colonial government put in place a funding mechanism to support its fledgling farmers in advance. The analysis then drew an irony by way of a contrast; by closing AFC we shut down a working agricultural financial support system just before we embarked on our land reform.

A case was made that our rural farmers produced the bulk of maize (70%), cotton (>70%) and now the bulk of tobacco without 99-year leases. An argument was then presented that instead of being so engrossed to the point of distraction by focusing on just 14 000 A2 farmers who need the 99-year leases why not enable the 1,8 million ordinary rural farming households who have a proven track record of producing without any lease at all.

I have shown in an article in this column published in April this year that on one-sixteenth of a hectare our rural farmers can produce 1 tonne of maize (implying a 16 tonnes per hectare productivity — that is world class) for the equivalent of US$50. The same is possible for soya — bringing our ordinary rural households into soya bean production just like what has happened with tobacco. This is a whole new level of disruptive innovation thinking.
It’s farming first. Our ordinary rural households should be leveraged on for successful re-industrialisation — it’s a low hanging fruit. A stable Zimdollar is anchored on disruptive innovation agricultural production.

Brett Chulu is a management consultant and a classic grounded theory researcher who has published research in an academic peer-reviewed international journal. —brettchuluconsultant@gmail.com.

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