Industrial output growing, but local content still low

While the presence of locally produced goods on supermarket shelves has improved significantly, accounting roughly for 85 percent of the retail space, Zimbabwe’s import bill of raw materials continues to swell amid calls to expedite domestication of supply chains.

In the past few years, factory activity by Zimbabwean firms improved, supported by limited movement of goods due to pandemic restrictions that affected global supply chains as well as improved availability of foreign currency to import raw materials.

However, analysts feel that as much as the country has made progress in increasing local production, focus should now shift towards increasing thresholds of the local raw materials.

“Essentially, there is nothing much exciting when the majority of the products claimed to be local are being manufactured using imported raw materials. The rules of origin stipulates that for a product to be classified as local, at least two thirds of the raw materials should be local.

“We need deliberate policies to enhance localisation of supply chains to reduce the risk and disadvantages of importing,” economist Carlos Tadya said in an interview.

The manufacturing sector remains the biggest recipient of foreign currency on the auction system with the bulk of it being used to import the raw materials. Recent trade statistics also show significant increase in raw material imports for the industry.

“The sad thing is we are spending huge amounts of money on things that we can do here,” Mr Tadya said. “We are importing crude cooking oil, but we have the land to produce our own oil seeds.

“The point is let’s produce where we can if we are to be competitive. Even if you talk of penetrating lucrative export markets, how do you expect our products to compete.”

Another economist, Professor Gift Mugano said “a backward approach” would ensure Zimbabwe increases the content of local raw materials in the production of local products.
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“The concern still remains around the local inputs used in the production of local products,” said Prof Mugano.

“We still have a low percentage of local inputs in local products. We now need to look backward and efficiently produce some of these raw materials on our own,” he added.

Zimbabwe has seen a positive growth trajectory in the manufacturing sector with Government helping industry in their retooling exercise. Resultantly, capacity utilisation is projected to increase to 61 percent in 2021 from 47 percent in 2020.
Industry and Commerce Minister Dr Sekai Nzenza said that while 85 percent of products
were now being manufactured by local companies, focus should now shift towards
increasing thresholds of local raw materials in local products.
“The focus should be now on what we can do competitively; creating linkages with the
agriculture sector and also to be innovative,” said Dr Nzenza.
“Zimbabwe is targeting value chains in pharmaceuticals, leather, cotton to clothing,
dairy sector, fertiliser industry, bus and trucks manufacturing.
“In line with provisions of the Zimbabwe National Industrial Development Policy, these
sectors are at the centre of the country’s industrialisation strategy.-The Herald