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New govt policy seeks to reverse industrial woes

Derelict industrial buildings house obsolete machinery while a few trucks move out of various yards, ferrying the limited locally produced goods to the city centre.

Such has become Zimbabwe’s once vibrant industrial scene, following years of political and economic problems that led to widespread closure of companies and massive capital flight.

The inception of the inclusive government in 2009 resulted in a relatively stable economic environment but investment has not been as forthcoming owing to policy inconsistencies that have deterred foreign capital inflows.

But analysts say a policy document, the Industrial Development Policy (IDP) 2012-2016, launched recently, could reverse that trend if implemented religiously. It aims to encourage the development and growth of the country’s manufacturing sector.

Significantly, the policy seeks to anchor on the economic gains made since the inception of the coalition government.

Zimbabwe’s manufacturing sector’s contribution to the Gross Domestic Product (GDP) declined to below 10% by 2008 from an average of 20% in 2000.
The sector’s contribution presently stands at 12%.

The document realises that the principle of policy certainty which avoids sudden changes to investment regimes will greatly contribute towards the successful implementation of the IDP.

“This principle will embody the existing legal instruments which protect the value and ownership rights of the investors as well as on the principle of local ownership of the means of production as per the existing indigenisation laws,” reads the document.

Capacity utilisation currently stands at 57% but the policy targets at increasing the figure to 80% by the end of the planning period.

In a presentation at the launch of the IDP, co-chair of the National Economic Consultative Forum, Robbie Mupawose, noted that policy effectiveness related to the extent to which the public has confidence in policy announcements.

“There is need to ensure congruency of policy where business can make medium and long-term plans without any (policy) inconsistencies,” he said, adding that the elimination of a culture of rent seeking and arbitrage would consequently see the economy growing.

Mupawose said the industrial basic supply chain which relates to efficient provision of electricity and water has to be dealt with urgently, in order for the policy to be implemented successfully.

“Emphasis should be placed on value addition in industry which will contribute towards employment creation,” he said.

The policy envisages transforming the country from a producer of primary goods into a producer of processed value- added goods for both the domestic and export markets.

Economic analyst, Eric Bloch, said the policy document was a step in the right direction but two key issues would need to be addressed for successful implementation of the policy.

“Firstly, recapitalisation of industry will certainly be essential for the recovery of the country’s industry,” said Bloch. “Secondly, the country will need to restructure its customs tariffs.”

The policy proposes that Zimbabwe’s industry be offered temporary protection through an upward raise in tariffs during the three-year period of the IDP’s implementation.

However, an upward revision in tariffs would be inconsistent with Zimbabwe’s obligations under the World Trade Organisation, Sadc and the Common Market for Eastern and Southern Africa treaties.

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