WHILE the government says the volume of locally-manufactured products in the retail sector rose to 85% last year from 40% five years ago, a weakening economy and rising price levels have forced the authorities to endlessly relax import requirements to plug a deficit in output, raising questions on the validity of official figures.
As election season gathers momentum, post-cabinet Press briefings have become platforms for ministers to hype-up achievements made since their appointment, with the hope of retaining their portfolios or better ones despite the starkly contrasting realities on the ground.
Zimbabwe, a net importer, has been relying on imports of both finished products and throughput from its key trading partners such as South Africa and China.
However, Information minister Monica Mutsvangwa recently projected a different picture during a post-cabinet briefing.
She said manufactured exports have increased in value from US$324 million in 2021 to US$366 million in 2022, with most exported products being food, manufactured tobacco, textiles and packaging. Capacity utilisation increased from 47% in 2020 to 66% in 2022.
“The strong performance in the industry and commerce sector demonstrates that the Second Republic led by His Excellency the President, Cde E.D. Mnangagwa, is walking its talk in industrialising and modernising the economy, as well as economic growth,” Mutsvangwa said.
“Cabinet would like to advise that the State of Industry Booklet detailing performance in the industry and commerce sector is available for public reference.”
Despite hyping-up the state of the manufacturing sector, realities on the ground paint a different picture. The government has over the years been gazetting several statutory instruments relaxing import restrictions.
The minister Finance and Economic Development gazetted Statutory Instrument 89 of 2023: Customs and Excise (Suspension) (Amendment) Regulations, 2023 to suspend duty in the importation of ammonium nitrate solution by listed companies for a period of 12 months.
The duty would be suspended for specified amounts of ammonium nitrate. The suspension of duty will not suspend value-added tax (VAT) and the companies will still be expected to pay VAT for the imported ammonium nitrate.
Treasury has in the past gazetted statutory instruments relaxing the importation of groceries, reflecting how uncompetitive local producers have been and also how they are failing to meet domestic demand.
Last October, Kurai Matsheza, the Confederation of Zimbabwe Industries (CZI) president, left delegates attending the ZimTrade Exporters’ Conference shocked when he said famine-hit Somalia fared better than the southern African nation in terms of export diversification.
“There is a need to diversify, obviously, our production processes. Mining and services are coming up but more than 70% of our exports are mineral-based,” Matsheza said.
“In terms of the export diversification index, Zimbabwe is about 2.5, which is even lower than countries such as Somalia. The higher the number, the less diversified you are. So, the ideal situation is to move closer to zero . . . Only 18% of products exported by Zimbabwe have shown some competitive advantage,” Matsheza said.
Just to bring that into perspective, according to the World Bank, in the early 2000s, Zimbabwe used to introduce 600 new products in the export basket.
The rate of discovery (export of previously un-exported products), however, has been declining and in 2019 it dropped to just five.
According to the Zimbabwe National Statistical Agency figures for the volume of the manufacturing index for the first three months of the year, the average output index for food stuffs for the first quarter of 2023 was 390.3 compared to 625.2 recorded in the 4th quarter of 2022.
This reflected a 37.6% decrease in foodstuffs production. Immediately, Zimbabwe’s quest to transition into an upper middle-income economy by 2030 was brought into sharp focus and questions were asked as to how feasible this ambitious project is without a robust export-driven development plan.
For decades, economic diversification has been a policy priority for low-income and middle-income economies. Zimbabwe, which at Independence had one of the most diversified economies on the continent, has often been cited as a case study on the efficacy of sanctions.
During the 1965 Universal Declaration of Independence era under former late prime minister Ian Smith, Rhodesia, a British territory in southern Africa that had governed itself since 1923, now regarded itself as an independent sovereign state.
It was slapped with sanctions, but emerged stronger.
Through a combination of inward-looking policies and an aggressive industrialisation drive, Rhodesia, which later became Zimbabwe at Independence in 1980, managed to build a solid manufacturing sector with forward and backward linkages and its core infrastructure continues to stand to this day.