HomeEditorial CommentChoose between carmakers or heaps of mangled steel

Choose between carmakers or heaps of mangled steel

THIS week’s comment by Nissan’s Sub-Sahara region general manager, Linda Mazimhaka that Zimbabwe is far from achieving the right conditions for establishing car assembly plants was unsettling.

One of the factors that global carmakers consider before trooping in includes size of the local market — that is the ability of domestic consumers to absorb freshly minted cars.

For Zimbabwe, many factors stand in the way.

Economic mismanagement, unrestrained plunder and corruption have decimated a once-thriving middle class, which holds the spending power across economies.

Economies that are dominated by low-spending classes seldom expand. In Zimbabwe, about 5,7 million people have taken refuge in the informal sector following deadly deindustrialisation.

Secondly, worsening poverty levels mean that many will not qualify for bank loans and loans given by companies to their staff to spend on luxuries.

This is why the market for newly assembled cars has dwindled, with damaging consequences on domestic assemblers like Quest Motors and Willowvale Motor Industries.

Zimbabwe has been importing about 60 000 old cars a year, compared to 4 000 new vehicles being sold on the market.

The old car market has blossomed since 2009 because it costs less than US$2 000 for a product to land in Zimbabwe, compared to new cars costing over US$20 000. For a decade, Zimbabwe has turned into a dumping ground for cheap cars from Japan and other advanced countries, which is bad for the environment.

Environmental concerns are not the only problem — by choosing to flood the market with heaps of mangled steel, Zimbabwe is closing off the market to a sea of opportunities.

Given attractive packages, these global car assemblers can absorb many of the skilled and semi-skilled workers roaming the streets.

They can unlock opportunities in downstream industries, such as those for battery and tyre producers, who all feed into the massive facilities that churn out cars.

That would come in handy for a country that has struggled to absorb working class people into the mainstream economy, relegating five million of them to economic refugees worldwide.

Zimbabwe has to choose between being a huge dumping ground for used cars in southern Africa, and doing the right thing.

The right thing would be to roll out policies that attract carmakers to set up plants here. This would be important considering that the African Continental Free Trade Area will next year be entering its second year of existence.

Vehicles produced in Zimbabwe would have unrestricted entry into the African markets, helping the country generate foreign currency, create employment opportunities and improve taxes being generated by the Zimbabwe Revenue Authority.

The scope of advantages associated with car assemblies is big. But it is up to the country to choose if it wants to be swamped by old cars, or set up plants to create a vibrant economy.

For now, it is up to the government to listen to counsel, or continue pursuing the destructive path.

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