HomeBusiness DigestGrowth strategies for 2022

Growth strategies for 2022

Dr Eve Gadzikwa Economic analyst
This year promises to be an exciting one filled with new promise, hope and opportunities. Yet at the same time it also comes with new challenges. We can always count on Benjamin Franklin for some of this conventional wisdom when he aptly reminded us that, “by failing to prepare, you are preparing to fail.” I love January because this is a time when everyone is in the planning or reflective mood.

Optimism
The rains are upon us and it is easy to feel optimistic when one sees large stretches of maize crops on every highway, yet we are also starkly reminded of the negative effects of these rains on our roads every year. Regrettably, serious potholes have resurfaced around the cities and in residential areas. What concerns me is that some of these roads were resurfaced not so long ago. Our roads were never designed to carry heavy loads like water delivery vans on a daily basis. The end result is that residents are not only buying expensive water for domestic use, but they are also having to replace burst tyres repeatedly and repair their own roads.

Adopting road resurfacing standards in terms of improving the quality of materials and workmanship are important considerations in terms of resuscitation of roads. In other words, it is not enough to use good quality bitumen, but we also need to standardise our workmanship to ensure that our roads’ integrity is guaranteed for at least five years. Between each rainy season, roads need to be regularly maintained to preserve life, ease congestion in the city and safeguard our valuable assets. Enough said about the state of our roads.

Another classical example that brings standards into the spotlight is in the area of building construction projects. It is sad to see so many people especially those in the diaspora getting swindled of their hard earned cash by unscrupulous developers who use poor quality untreated wet off saw timber, substandard steel bars, poor roofing tiles to build houses and poor workmanship. .

Yet another interesting dynamic which we do not always talk about but has a huge impact on our lives is the ability to enjoy quality travel especially during the holidays. Despite the suspension of a number of restrictions, international travel is far from being a stroll in the park due to Covid-related requirements which have resulted in unprecedented challenges in terms of planning. Travel used to be fun, but no more. With the world starting to open up in terms of allowing international guests on the back of Covid vaccinations, we are slowly getting used to travelling on work-related trips. Each country has different travel requirements which makes travel potentially a nightmare.

State of industry as at December 2021
With that context in mind, we can review past performance. A few years ago, industry was in free fall with capacity utilisation registering very low figures. Green shoots were noted around 2019 when capacity grew to 36,4%, then 42% in 2020 and by the end of 2021, CZI predicted capacity utilisation to be north of 60%. By 2021, 70% of goods on the shelf were being made in Zimbabwe compared to 5% in 2017. Capital goods now make up US$105 million (15%) of all imports every month compared to US$81 million in 2020. About 70% of forex is going to importation of raw materials, equipment and machinery to support retooling and resuscitation of industry under NDS1. All of these efforts have resulted in more local production. In addition, incentives for the productive sector, working capital equivalent to 84,75% went to the production sector, 11% of which went to the manufacturers.

Venture capitalists are desperately still needed to support SMEs. With all indicators looking positive, are we assured of sustainable industrial development over the long term in the face of Covid-19 and now Omicron variant? We are certainly not there yet though prospects look encouraging. It is time to take a fresh look at what industry should look like beyond 2022 in the face of the pandemic.

Opportunities during Covid-19
One of the viable options for developing countries around the world was to consider adopting local production by implementing import substitution strategies after Covid -19 lockdowns. The next challenge was to ensure that goods produced met the required standards. We embraced this opportunity to demonstrate that, by integrating standards into the import substitution strategy, it is possible to localise the production of hand sanitisers, PPEs and other essential products to an acceptable level of quality. Necessity is the mother of invention, when the need for something becomes essential, you are forced to find ways of getting or achieving it.

Ten months ago, Zimbabwe adopted an import substitution policy and implementation strategy to cut down the importation of finished consumer goods, promote value addition, resuscitate industry and drive industrialisation. Import substitution is in fact the direct opposite of export-led growth.

Zimbabwe adopted this inward looking strategy whereby it strategically decided to put a plug on certain goods that it can easily produce domestically. There are a number of advantages of import substitution which include protecting local jobs in the domestic market, protecting local culture and social habits and also protecting the economy from the power and possible bad influence of multinational corporations.

Conclusion
As we start the year, let us resolve to plan our domestic production, travels, road rehabilitation, farming and building projects by beginning with the end in mind. In the face of a pandemic, import substitution is a viable option if it is supported by the right policies and standards for production. During the onset of the pandemic, many lessons have been learnt in terms of what works and what does not work. Evidence shows that this strategy did prove to be a success especially in regards to boosting capacity utilisation, promoting local content and driving growth. In the long term, export-led growth is the ultimate goal for any modern society as it enables a nation to generate enough foreign currency to fuel industrialisation and exponential sustainable growth. In terms of growth strategies for 2022, let us integrate standards in our industrial processes, improve workmanship and embrace business excellence in our operations. We can optimise resource allocation by doing due diligence on our suppliers, prioritising quality, innovating, embracing technology, learning new skills and improving our relations with our stakeholders.

If we do all these things our businesses will not only thrive but will grow.

Dr Gadzikwa is SAZ Director General. These weekly New Horizon articles, published in the Zimbabwe Independent, are coordinated by Lovemore Kadenge, an independent consultant, past president of the Zimbabwe Economics Society and past president of the Chartered Governance and Accountancy Institute in Zimbabwe (CGI Zimbabwe). —kadenge.zes@gmail.com or mobile: +263 772 382 852.

Recent Posts

Stories you will enjoy

Recommended reading

You have successfully subscribed to the newsletter

There was an error while trying to send your request. Please try again.

NewsDay Zimbabwe will use the information you provide on this form to be in touch with you and to provide updates and marketing.