Steady decline of Zimbabwean manufacturing
G>RECENTLY released data from the Central Statistical Office (CSO) evidences the magnitude of the continuing decline of Zimbabwean manufacture.
That decline is an economic tragedy, as Zimbabwe could so readily have enjoyed massive growth. As the second most industrialised country in Comesa, and with a geographic location facilitative of ready delivery of manufactured goods to most of Comesa’s member-states, Zimbabwe could have a very considerable market of more than 320 million people, over and above diverse other export markets and the servicing of domestic market needs. Instead, Zimbabwe sacrificed its opportunities to political dictates and governmental mismanagement, its neighbours capitalising on Zimbabwe’s foolhardy disregard for the prospects of economic growth.
Between 1990 and 1998, Zimbabwe’s manufacturing sector grew, albeit by a not impressive 6,6%. However, the relatively minimal extent of that growth should not be cavalierly dismissed for, in practice, it was primarily achieved during the comparatively brief period of 1994 to 1997 when —for a regrettably all-too-short period of time — government positively pursued economic recovery and growth. During those few years, government made some genuine endeavours to bring about economic transformation and improve the lot of most Zimbabweans, instead of focusing almost exclusively upon entrenchment of its power and enhancement of the wealth of those in the hierarchy of political control of Zimbabwe.
Unfortunately, the development of the manufacturing sector was short-lived, for in late 1997 government once again allowed the objectives of power retention to override the welfare of the population. All attempts of constructive land reform were abandoned and the economy was cast into spiralling decline by embarking upon a grossly profligate programme of “compensation” to tens of thousands of war veterans (a few of whom were possibly deserving of some compensation, but most of whom had little or no justification for a governmental largesse which would inevitably cause crippling fiscal deficits, immense borrowings by the State, and rapidly progressing hyperinflation).
These, and other, acts by a government that was heedless to all advice set the economy on a path of collapse.
Foremost in that collapse has been the very foundation of the economy, being agriculture, but the collapse of the industrial sector has also been very considerable. By the end of 2003, agricultural output was, at best, 40% of that in 1998, and industrial output reduced to 64%. Every single element of the manufacturing sector contracted over the six-year period of 1998 to 2003. The CSO data (which includes estimates of production in November and December 2003) demonstrates that as against a 1990 index of 100, only two sectors of industry had grown over a 14-year period, being the wood sector at 162,9 and clothing at 104,4. All others had shrunk considerably, with chemicals having an index ranking of 68,0. Metals at 65,4.
Drink and tobacco at 62,0. Paper 61,2 and non-metals 60,0. Even more horrific was the decline of the food sector at 48,5, transport at 38,6 and textiles at 32,0 whilst all other sectors were at 33,4. But of particular significance is that in contrast to these dismal index levels at 2003, only four elements of the manufacturing sector were below the 1990 index of 100 in 1998, being food at 83,7, textiles at 79,1, metals at 77,5 and other non-specified elements at 69,2. The other seven classifications had all enjoyed growth between 1990 and 1998, with the most significant being wood, which had soared to a spectacular 342,8. Non-metals were at 126,7, chemicals at 120,3, clothing at 114,6, drink and tobacco at 111,1, paper at 102,7, and transport at 101,1. But from 1998 to 2003 every single facet of the manufacturing sector shrunk almost continuously, year on year, with the sole exceptions being that clothing grew marginally by 7,3% in the 4 years to 2001, whilst metals grew by 5,7% in the 3 years to 2000.
For most of the manufacturing sectors, the decline between 1998 and 2003 was horrifyingly great. Transport shrunk by 61,8%, textiles by 59,54%, non-metals by 52,64% and wood by 52,47%. The non-classified sectors declined by 51,73%, drink and tobacco by 44,19%, chemicals by 43,47%, food by 42,05%, paper by 40,41%, and clothing by 8,9%. In the main, the reduction in manufacturing output occurred in the last two years for, prior thereto, industrial contraction was relatively insignificant in extent.
This tragic development, markedly in contrast with the indisputably great prospects of industrial growth so evidenced in the final years of the 20th century, is attributable to a variety of factors. First and foremost was the destruction which characterised the agricultural sector as government intensified its calamitous programme of land acquisition, redistribution and resettlement. That sector had accounted directly for over 18% of Gross Domestic Product (GDP), whilst its indirect contribution downstream within the economy as a by-product of the spending of agricultural profits, wages and salaries accounted for an estimated further approximately 17%. Agriculture was the incontrovertible foundation and mainstay of the economy. (At that time, government could credibly have heralded that “The land is the economy, The economy is the land”, but that is distressingly no longer so!). As the production in agriculture became ever less, that sector required lesser production from the manufacturing sector.
Similarly, as agricultural incomes diminished, so too did consumer spending on industrial outputs. And as the demand for those outputs became less and less, the demand by some industrial enterprises upon other industrial enterprises also lessened. The emaciation of manufacturing had commenced, and all because government was dogmatically and obdurately determined to pursue a transformation of agriculture founded upon political objectives, extreme racism, and gross injustice.
It did so notwithstanding that there were widespread representations as to other ways of achieving agricultural transformation — ways which would not only not bring agriculture to its knees, but would have achieved equitable, merit-based redistribution and resettlement, and would have enabled agriculture to contribute to economic growth. Those representations did not synergise with government’s perspectives of how to maximise support at the polls. They did not reconcile with government’s deep-seated racial bias. So they were not even accorded consideration. Instead, government persisted, and still persists, with its ill-chosen path, no matter the negative consequences.
The manufacturing sector was also, and continues to be, a victim of inflation. Inflation has been caused by many, diverse factors. Of particular impact was the devastating depreciation of the Zimbabwean dollar in November, 1997. That had been as a direct consequence of the war veteran compensation programme, and the further depreciation as foreign currency scarcity intensified as a result of declining agricultural production, inflation-driven falls in export-market competitiveness, alienation of the international community and, in particular, the donor states, and increasing loss of foreign investor interest.
That loss of interest was partially reactive to the deteriorating economy, and partially to an intensifying governmental contempt for the fundamental principles of human rights, law and order, and democracy, concurrently with the adoption of a profoundly confrontational stance against all countries that did not align themselves with Zimbabwe’s authoritarian, racial and economic policies. The surge of inflation to hyperinflation levels rapidly eroded consumer spending power and, therefore, consumer demand upon the manufacturing sector. The pronounced inflation was also not accompanied, since 2000, with commensurate exchange rate adjustments and, as a result, a vast majority of manufacturing exporters were, at the least, forced to reduce their export operations considerably, whilst many others had to discontinue exports entirely.
The resultant drop in productivity was catalytic of yet further inflation, creating an ongoing spiral of diminishing production, including closure of many enterprises.