Imports hit all time high, decimating local businesses

LIVINGSTONE MARUFU

Confederation of Zimbabwe Industries (CZI), the country’s largest business lobby group, has said that imports—which have hit a record high—are decimating local industry amid fears that the enormous import bill will hasten deindustrialization and reduce the GDP contribution of the manufacturing sector.

Even more concerning, the nation is importing by-products of the primary goods it produces, which further reduces the competitiveness of its exports because it needs to import certain raw materials in order to advance up the value chain.

Kurai Matsheza, president of CZI, told  Business Times that the production of by-products from the nation’s primary goods requires new equipment as well as expertise.

“The import dependency ratios are way too high and we need to enable the emergence of the intermediate goods manufacturing sub-sector through deliberate policies that will promote entrepreneurship and investment in that sub-sector. This is what will localise our production and deepen our local value chains as well as build our capacity to participate in regional value chains,” Matsheza said.

The manufacturing sector has been trending downward due to a high reliance on imports.

Industry leaders are concerned because the trend suggests deindustrialisation at a time when the nation is pursuing industrial transformation, with companies seeking to shift the economy up the value chain to increase production of high-value goods.

According to Matsheza, this performance suggests that policy measures and the anticipated objectives outlined in National Development Strategy 1 are not aligned.

“This trend is also worrying because it is making us a primary sector driven economy when the goal is to industrialise. The centrality of the manufacturing sector to the industrialisation goals cannot be overemphasised noting that there is no country that has prospered without becoming highly industrialised,” he said.

Due to a lack of equipment and technical know-how, the nation has lost a significant amount of foreign exchange when importing by-products of raw materials.

For instance, Zimbabwe exports roughly US$31m  worth of raw hides annually, but imports US$1.6m worth of leather goods (handbags, purses, etc.) and US$49.5m worth of cane sugar annually, while importing US$3.5m  worth of other sugars (lactose, maltose, glucose, and fructose).

Zimbabwe also imports woven fabrics valued at approximately US$1.5m  annually, while exporting lint valued at US$47.9m , according to CZI.

According to Matsheza, if local businesses added value to their products, Zimbabwe’s earnings could triple.

Matsheza stated that close cooperation between the government  and private sector is necessary to halt the trend of deindustrialisation.

“The ministries in the value chains and in the economic enablers as well as the fiscal and monetary authorities need to collaborate to ensure that there are deliberate policies to accelerate industrialisation and stop the de-industrialisation trend that we are beginning to see.

“To accelerate industrialisation, the country needs  to  become the most efficient and most competitive place of production. The best place to do business first in the region then in the continent,” Matsheza said.