INDUSTRY and Commerce minister Sekai Nzenza is engaging private players in the manufacturing sector to craft an import-substitution policy.
Nzenza said the move was aimed at boosting the production of basic goods.
She said while this has been on the cards for a long time, the government has been forced to expedite the process due to the Covid-19 pandemic, which resulted in closure of borders.
“I wish to emphasise three key angles. As minister of Industry and Commerce, I am ready to implement the NDS-1 (National Development Strategy-1) and am totally driven by the local content strategy focusing on import substitution, pushing or promoting or increasing production using local resources, creating employment and introducing innovation,” Nzenza said.
“The value chains include: fertiliser, cotton, leather, soya beans, pharmaceuticals, steel, granite, sugar, tobacco, and others. I am reaching out to the Agriculture ministry and that of Mines and Mining Development to promote these import-substitution value chains. I am engaging the private sector and strengthening the government relationships with them,” she said.
Over the past year under Covid-19 lockdowns, Nzenza added, there has been a marked increase in locally manufactured goods on the market.
“The ministry developed the Local Content Strategy that seeks to foster local value addition through utilisation of domestic resources and localisation of supply chains. The Covid-19 pandemic has resulted in the closure of borders, thereby affecting global and regional value chains. In this regard, companies have had to quickly implement strategies of producing products. The producers have taken advantage of the stable foreign currency auction system by accessing the required foreign exchange to import raw materials.
“A recent study done by the ministry has since revealed that the shelf occupancy of local products has increased to between 80%-90%. The value chains incorporating the agricultural inputs, packaging, transport and commerce stand to benefit from this multiplier effect of producing locally. To buttress the Local Content Strategy, Treasury has indicated its support to the Buy Zimbabwe programme,” she said.
Nzenza indicated that her ministry was working closely with companies to improve the uptake of contract farming for easy access of raw materials, especially wheat and maize. The import substitution strategy, she said, would help significantly cut the prices of goods, contrary to reports that this would result in price hikes.
“There has been a significant increase in the number of millers interested in participating in wheat contract farming. The Ministry is working together with the private sector to promote wheat contract farming,” she said.
“Due to the drought experienced during the last season, the country had poor harvest in wheat which exacerbated the product shortage. As a result, the country had to import wheat flour to cover the demand and supply gap. The high logistical costs of bringing the aforesaid product into the country resulted in the high cost of the final product on the market which is being witnessed today.”
Nzenza further said: “Increase in prices of raw materials such as grist, packaging, labour, electricity and fuel have also affected the price of the final product. Grist is used for blending the local wheat. Bread price has thus increased from an average of ZW$72 in October 2020 to an average of ZW$88-$90 in January 2021.
“With the perceived bumper harvest this season, we are looking forward to adequate supplies of maize in the country, thus there won’t be a need for grain importation.”
She said in the implementation of the soya value chain, oil expressers have entered into a direct capacitation of local farmers through provision of inputs and agronomy services.
“In discussions with the sector players, the oil expressers have indicated their willingness to partner with all stakeholders in the production of soya beans. The price increase in cooking oil is attributed to the increase in the price of soya bean crude oil on the international market from US$840 to US$1 240 per tonne. The world’s largest supplier of soya bean crude oil is Argentina and it is the source market for our companies. Other input costs have also gone up and these include hexane, caustic soda and packaging. The net effect has been the increase in the price of the finished product from ZW$260 (US$3) in October 2020 to an average of ZW$334 (US$3,98) in January this year,” Nzenza said.