Zim de-industrialises while neighbours prosper

INDUSTRIALISATION has been on a freefall in Zimbabwe since 2010, with the country lagging behind its regional neighbours, highlighting the need for the country to ramp up exports and improve the business environment, a report has shown.

The country is ranked 31, with a score of 0.4974, out of 52 countries on the African Industrialisation Index (AII) published by the African Development Bank (AfDB), to strengthen knowledge around drivers of industrial development.

The index provides a picture of progress that has been made in industrial development across the continent for the period 2010 to 2019.

Its 19 indicators cover manufacturing performance, capital, labour, business environment, infrastructure, and macro-economic stability, ranking African countries’ industrialisation across three dimensions: performance, direct determinants and indirect determinants.

Direct determinants include endowments such as capital and labour, and how these are deployed to drive industrial development, while indirect determinants include enabling environmental conditions such as macro-economic stability, sound institutions and infrastructure.

Findings by the index show that Zimbabwe’s score has been falling since 2010, from a ranking of number 26 with a score of 0.4939, which has seen the country drop from the middle- into the lower-middle quintile.

Zimbabwe’s score falls below the 2021 average of 0.5144.

In 2011 and 2012, the country was ranked number 27 and 24 with index scores of 0.5044 and 0.5209, which has been falling since then.

2014 saw the country drop rank to 27, a trend that continued in the next five years when the country’s ranking fell to 29, 26, 33, 32 and 33 according to the AII.

South Africa, in the top-quintile has remained consistent, maintaining first place in the period under review.

Other Southern African Development Community countries in the top quintile are Mauritius, Eswatini and Namibia, ranking fifth, sixth and tenth respectively.

Botswana and Zambia are both in the upper-middle quintile, while Lesotho, Madagascar, Mozambique and Seychelles are in the middle quintile. The index has also shown several countries have been industrialising over the years, although at a snail’s pace.

“Overall, many countries have made significant gains in their industrial development over the coverage period 2010–2021, with 37 of 52 regional country members becoming industrialised.

“However, some countries recorded only a marginal improvement, thereby falling in the ranking as the score was not enough to boost it, while others performed satisfactorily. Only 25 countries improved their rank and four remained in the same position as in 2010,” read the index report.

Countries in the bottom quintile recorded the highest improvement over the coverage period, with 9.7% gains, followed by the lower-middle quintile 9.5%.

Despite the top quintile boasting the most industrialised countries, it recorded a decrease in its score (- 0.9%), owing to a serious deterioration in the direct determinant component.
According to AfDB, inadequate infrastructure has been the most key pressing constraint on industrialisation.

“Half of Africans currently have no access to energy and 30% lack access to clean water — essential inputs for agro-processing and other industries. The average cost of electricity to manufacturing firms in Africa is four times higher than industrial rates elsewhere in the world, while poor quality supply leads to idle workers, lost production and damaged equipment.

Zimbabwe among other countries has been reeling under power shortages with Kariba hydro-power station hampered by very low water levels. This has prompted the Zambezi River Authority (ZRA) to recommend a shutdown of the power station until water levels have risen again.

“Africa’s paved road density is just two kilometres (km) per 100km2 of land area, compared to 25 in Asia and 122 in Europe. Inadequate or poorly maintained transport infrastructure makes it more expensive for firms to access raw materials and deliver their goods to consumers,” according to the AII.

Overall, AfDB has estimated the continent’s infrastructure needs at US$130–US$170 billion per year, with a financing gap of US$68–US$108 billion.-thenewshwaks