New industrial policy hailed

Kudakwashe Mhundwa and Michael Tome
The Zimbabwe National Industrial Development Policy (ZNIDP) 2019-2023 that Government has launched, is expected to guide the sustainable growth of the country’s industrial sector, according to analysts and industry experts.

The targets set are achievable if all key stakeholders play ball and the new policy will result in the development of new industries, leading to transformation and diversification of local industry.

The policy, which was approved together with the Local Content Strategy (LCP) announced last week, is underpinned by a focus on growing the country’s manufacturing sector that has been facing a number of challenges over the past few years.

The new Industrial Development Policy has a set target of attaining manufacturing sector growth rate of at least 2 percent per annum and manufacturing value-added growth of 16 percent per year.

Low capacity utilisation has dogged the manufacturing sector, as companies struggle with significant constraints to recapitalise and access foreign currency for purchasing of critical raw materials.

ZNIDP has outlined that Zimbabwe’s manufacturing sector will grow at a rate of 2 percent per annum and LCP aims to increase capacity utilisation in prioritised sectors from current levels of approximately 40 percent to at least 75 percent by 2023.

To that end, Government has already started making inroads towards making sure that capacity utilisation grows by ensuring that local industries which require about US$2 billion to retool start on that path.

Minister of Industry and Commerce Mangaliso Ndlovu told The Herald Business recently that Government is in talks with AfrieximBank to facilitate offshore borrowings for private firms to start retooling.

However, business representatives and economists have indicated that the target is not a walk in the park but can be achieved in long-term.

Zimbabwe National Chamber of Commerce (ZNCC) chief executive Chris Mugaga said: “The set targets are not that easy to achieve considering the prevailing economic headwinds, but can be realised if the industry is given three to five years’ time to operate in a stable economic environment. The Government needs to address macro-economic challenges especially on the currency front.”

Economist Brains Muchemwa indicated the need to address the necessities that assure smooth flow of industrial operations if these prescribed targets were to be achieved.

“The key enablers to our manufacturing sector, in particular energy availability and a stable macro-economic environment need to be uncompromised to enable the sector to preserve and grow its working and fixed capital bases in order to register positive growth.

“While the anticipated 2 percent growth  appears a decent target, a lot more would be needed to protect the sector once again from marauding regional competitors riding on the back of their stable operating environments,” said Mr Muchemwa.

Other key components raised in the policy are around raising the manufacturing sector’s value added growth to 16 percent per year and increasing merchandise export growth rate of 10 percent per year to orient the manufacturing sector toward exports and generate capital for a high savings rate, again this coincides with the LCS which also outlines the need to increase manufactured exports by 5 percent annually between 2019 and 2023.

The Zimbabwe National Industrial Development Policy (2019-2023) pursues an export-led industrialisation agenda that is supported by a National Trade Policy and a National Export Strategy that are intended to drive the productive sectors towards export orientation and international competitiveness.

The development comes at a time when  the country’s export basket continued to be dominated by primary commodities in particular gold, flue-cured tobacco, nickel, ferrochrome, chrome and industrial diamonds, contributing about 80 percent of the total exports.

Zimbabwe’s exports continue to weaken, according to balance of payments statistics that were revealed this week by Reserve Bank of Zimbabwe deputy governor Dr Kupukile Mlambo. The exports for the first four months of the year to April were US$1,2 billion the same as those recorded in the same period last year.

ZNIDP is anchored on key pillars that will guide the next phase of industrialisation in Zimbabwe.

These include development and strengthening of industrial value chains, agro-based industrialisation, mineral beneficiation, export-led industrialisation, commercialising of intellectual property, heritage/natural advantage based industrialisation, ICT-led industrialisation, emerging industries and start-ups, backward linkages with SMES, anchor and cluster industries, industrial parks and innovation hubs, services-driven industrialisation.

As part of its strategic thrust, the policy will also address labour market regulations.

Zimbabwe has experienced brain-drain of skilled manpower during the past decade creating a large skills gap. Skills upgrading is crucial for Zimbabwe’s modern industrialisation.

In this respect, Government has said it will engage business and labour under the Tripartite Negotiating Forum (TNF) to consider the need for productivity-based remuneration systems and flexibility in employment adjustments.