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Conversations must go beyond the forex auction and focus on production

28 Jan 2021 at 22:06hrs | Views
Driving through Zimbabwe's once vibrant industrial hubs in Belmont (Bulawayo), Paulington (Mutare), Southerton, Graniteside, Working, Msasa (all in Harare), and elsewhere, one gets the sense that the country is burdened by white elephants.

The economic crises of the last two decades left Zimbabwe's industries in ruins, and needing a restart to achieve the Government's vision of transforming Africa's once thriving nation into an upper middle class economy by year 2030.

Needless to say, there are patches in those decaying industrial hubs where one could see smoke bellowing through the chimneys and hear wheezing sounds from rotors and vibrating panels. But these are rare and far in-between.

There are also unmistakable manifestations of ineptitude on the part the city fathers where some industrial buildings have been turned into places of worship by Pentecostal denominations that are thriving with their prosperity gospel, as poverty-stricken citizens flock to these churches to escape privation.

The stark reality is that Zimbabwe and its people can prosper if they can start to make full use of the abundant God-given mineral wealth, rich soils and good climatic conditions that the former British colony is endowed with. The words of former Tanzanian president, Julius Nyerere, summed it up when he reminded then Prime Minister, Robert Mugabe, in April 1980 that he had inherited "the jewel" of Africa.

While Nyerere could be turning in his grave in disbelief of what Zimbabwe's economy has become, I doubt if we have seen the worst yet. If these dying industries are not reinvented and brought back to life in one form or the other, Zimbabwe risks turning these once thriving hubs into ghost industries and havens for all manner of criminal activities.

It is also safe to argue that the country doesn't need the new buildings that are sprouting everywhere like mushrooms, whereby the Chinese especially, are constructing new commercial structures in areas that are not designated for the purpose. Established town planners should therefore not be left behind as the country plots a new, definitive path for its economy.

We expect to see that which is already there getting rehabilitated and new investments being directed into these areas, even if it would take the creation of special economic zones to attract a certain type of investment in these areas.

This doesn't require rocket science. It needs a 360 degree shift to how business looks at the country's economy, riding on seismic changes precipitated by the Covid-19 pandemic which is obliterating incurable old models while giving a chance to new businesses.

It is sad and quite unfortunate that such conversations are absent in homes, organisations, communities and the country at large. All we are bombarded with on a daily basis is the warped belief that the foreign currency auction trading system which was introduced in June last year by Dr John Mangudya – the honcho at the Reserve Bank of Zimbabwe (RBZ) – is the panacea to the country's complex economic challenges.

Unfortunately, it is not!

Even as we applaud the Governor of the RBZ and his team for stabilising the foreign exchange market through the auction system, business would be fooling itself if it doesn't up its game by producing for the export market in order to sustain the foreign currency auction system.

The current trajectory whereby Zimbabwe chooses not to deal with trade and fiscal imbalances, which is a result of low production, is not sustainable. In the last decade, Zimbabwe's trade deficit has cumulated to US$30 billion, with the country's major imports – on an annual basis – being finished goods which include mineral fuels, machinery, cereals, motor vehicles, electrical products, pharmaceuticals, plastics and animal and vegetable fats with import value of US$1,499.7 million, US$467.8 million, US$510 million, US$340 million, US$263 million, US$201.6 million, US$181 million and US$154 million, respectively.

This calls for an import substitution strategy, starting with the quick wins, to rein in the major drainers of liquidity. The conversation must therefore shift from the current hallucination with the foreign currency auction system as the magic bullet to the country's challenges, to building on the Zimbabwe National Industrial Policy (ZNDP), which was launched last year by President Emmerson Mnangagwa.

On paper, ZNDP says all the right things and is in keeping with President Mnangagwa's inspiring vision. It aims to transform the comatose economy through value addition, increasing employment levels and promoting a culture of savings and ensuring a conducive, operating environment for the private sector businesses.

In addition, ZNDP envisions turning the manufacturing sector into a technologically-advanced and diversified industry by 2030 and acknowledges that the country must facilitate and promote the development of inclusive and globally-competitive industrial and commercial enterprises for improved consumer welfare and economic growth.
The expectation is that Zimbabwe must attain a gross domestic savings rate of about 30 percent of gross domestic product (GDP), manufacturing value added growth of 16 percent per annum, merchandise export growth rate of 10 percent per annum and increase the manufacturing sector share of employment to 20 percent in 2023.

Factors such as a stable macro-economic environment, policy consistency, value addition and beneficiation, upgrading and modernisation of industrial equipment and machinery and prioritisation of standards and quality infrastructure should be at the centre of national conversation to guide policy and the actions of our industrialists.

Entrepreneurs are particularly encouraged to take the bull by its horns and not whine and cry about government not being able to do things for them as if it owes them a living. In building the "Zimbabwean Dream", business must gain inspiration from Cornelius Vanderbilt, John Rockefeller, Andrew Carnegie, J.P Morgan, and Henry Ford who changed the face of the United States of America's economy through their industrial innovations.

These "midwives" of the "American Dream" took it upon themselves to build business empires that revolutionized modern society by sparking incredible advances in technology that enabled their struggling industries to rise to the top of the business world.

Zimbabwe's business leaders should know better!

After the colonial Rhodesian government proclaimed the Unilateral Declaration of Independence (UDI) in 1965, the country faced biting sanctions and yet it still managed to rapidly develop through the ingenuity of its leaders and entrepreneurs who had to lean on discipline and integrity to overcome the herculean challenges.

I recall one economist, Mr Vince Musewe, arguing that Ian Smith was not in it for the money or personal wealth and that he truly believed in the national cause.

"Although misguided, he was dedicated to it to the bone. He was not greedy nor did he pursue personal wealth accumulation as is the case with our current political leadership. The preservation and development of Rhodesia came first and all state enterprises and institutions were established and competently managed only to meet that end," he said.

Without much dramatization, if the locals are committed to the vision set out by their national leadership, they should be able pacify Julius Nyerere's spirit because Zimbabwe has all it needs to develop and yet its people continue to complain about how sanctions are preventing that.

"In my opinion, it is not the issue of sanctions that is our problem (real or imagined); it's our response to our problems that continues to hold us back and disempower us in coming up with our own solutions," opined Mr Musewe.

How true!

The challenge before business leaders is that of sustaining the auction system by going beyond policies and programmes adopted by the country's leadership. None but the business leaders themselves can develop and grow the production base, substitute imports and participate in manufacturing activities that target certain industries.

The role of government should always be that of providing clear guidance, subsidies, trade protection and anti-trust exemption, among other things that help build a conducive, operating environment.

Today, far-eastern countries such as Japan, Korea, and Taiwan stand as shinning examples where such industrial policies and ingenuity have been effectively used to catch-up with the West. By far, the most judicious example is Japan and we don't need to reinvent the wheel.

This has nothing to do with the foreign currency auction system but everything to do with production.

The ball is squarely in each and every entrepreneur's court.

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Andrew Lampard is a retired banker who worked in Zimbabwe and South Africa. For views and comments e-mail to andrewlampard264@gmail.com

Source - Andrew Lampard
All articles and letters published on Bulawayo24 have been independently written by members of Bulawayo24's community. The views of users published on Bulawayo24 are therefore their own and do not necessarily represent the views of Bulawayo24. Bulawayo24 editors also reserve the right to edit or delete any and all comments received.

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