Local companies driving investment, need Govt support

In an economic landscape characterised by adversity and uncertainty, local companies have emerged as beacons of resilience and optimism.

Spearheading this commendable investment drive are key players in the consumer staples sector, with conglomerate Innscor and National Foods making significant financial commitments aimed at bolstering domestic production capacity and reducing dependency on imports.

This concerted effort not only underscores the dynamism of these firms, but also holds the promise of substantial economic benefits, including job creation and an improved standard of living.

Innscor Africa Limited, a diversified conglomerate, has been at the forefront of this investment wave.

Over the past 24 months, Innscor has injected a staggering US$60 million into various projects.

This substantial investment has been channelled towards expanding production facilities, upgrading technology and enhancing supply chain efficiencies.

The strategic allocation of funds is expected to yield significant dividends by boosting local manufacturing capabilities and reducing the country’s reliance on imported goods.

National Foods Limited, another stalwart in the consumer staples sector, has also demonstrated a robust commitment to local production.

The company has invested US$5 million specifically in the production of pasta, a move that is poised to transform the local food industry.

This investment will not only enhance the availability of locally produced pasta, but also contribute to a substantial reduction in imports.

Collectively, the efforts of Innscor and National Foods are projected to slash import expenditure by approximately US$65 million annually.

The economic implications of these investments are profound and by augmenting domestic production capacity, these companies are paving the way for increased self-sufficiency.

The reduction in import dependency not only conserves precious foreign exchange but also strengthens the local economy. This shift towards local production is expected to have a ripple effect, stimulating ancillary industries and creating a multiplier effect that benefits the broader economy.

One of the most significant benefits of this investment drive is its potential to create jobs. The expansion of production facilities necessitates a larger workforce, translating into direct employment opportunities.

Moreover, the enhanced economic activity generated by these investments is likely to spur job creation in related sectors such as logistics, retail, and services. The resulting boost in employment has far-reaching implications for the standard of living.

Increased job opportunities mean higher household incomes, improved purchasing power, and a better quality of life for many families.

While the investment efforts of local companies are laudable, recent policy decisions threaten to undermine these gains.

The introduction of a new Statutory Instrument 68 removing duty on the import of flour-based foods, such as pasta, is a step in the wrong direction.

This policy is counterproductive, as it erodes the competitive advantage of local producers who have invested heavily in boosting their production capabilities.

The duty-free importation of pasta and other flour-based foods could lead to an influx of cheaper foreign products, which may undercut locally produced goods.

This scenario could stifle the growth of local industries, discourage future investments, and ultimately result in job losses.

Such a policy, while perhaps well-intentioned, fails to recognise the significant strides made by companies like Innscor and National Foods in building a self-sustaining local industry.

Despite the commendable efforts by local companies, it is important to acknowledge that much work remains to be done.

Unemployment rates remain high, and the full potential of these investments can only be realised within a supportive trading environment.

Policymakers must prioritise creating a conducive environment for business growth by implementing policies that support, rather than hinder, local production.

In conclusion, the investment drive by Innscor, National Foods, and other local companies is a testament to their resilience and commitment to economic growth. These investments promise to enhance local production, create jobs, and improve the standard of living.

However, the recent Statutory Instrument 68 removing duty on the import of flour-based foods poses a significant threat to these gains.

It is imperative for policymakers to re-evaluate this decision and align their policies with the goal of fostering a robust and self-sufficient local industry.

By doing so, they can ensure that the positive momentum generated by these investments is not only sustained but accelerated, paving the way for a more prosperous and self-reliant economy.

Tapiwanashe Mangwiro is a resident economist with the Business Weekly and writes this in his own capacity. @willoe_tee on twitter and Tapiwanashe Willoe Mangwiro on LinkedIn-ebusinessweekly