Zimbabwe Vice President Hon. J.T.R. Mujuru presenting a cheque to Never Maroka on achieving Extension Worker of the Year award sponsored by Pannar Seed Company., a photo by Pan-African News Wire File Photos on Flickr.
Govt should protect local economic players
January 1, 2014 Opinion & Analysis
Unfortunately some countries have become mass consumers while others remain mass producers. There are a number of goods that local companies are producing and have the capacity to meet demand and supply.
However, due to limited restrictions on imported goods, global players with their added advantage of mass production have found Zimbabwe to be a fertile market for their products, a situation that has stalled the growth of the local industry at every level.
Zimbabwe has become a dumping ground of some sort.
David Chiweza, author of “Out of the Rabble: Ending the Global Economic Crisis by Understanding the Zimbabwean Experience”, warns against unplanned opening up of the Zimbabwe market to finished goods.
Based on his first-hand experience of living in China during the years 1988-1992, Chiweza argues that far from the pretence of the free markets doctrine, all industrialising nations owe their development to monopolistic markets with China, for example, having imposed a total ban on imports for much of her early development stages.
He argues that markets along with other factors provide an environment necessary for human and industrial development culminating in global competitiveness as was the case with China.
The story of one Wellaz Jings, a specialist in furniture manufacturing in Glen View Area 8 in Harare, sums it up.
In 2006, he joined his brothers in the manufacturing of furniture when the Glen View 8 complex was opened.
Then business was very good.
Each day since 2006, he has witnessed his business slowly getting to its knees and today it is worse with consumers now preferring products from outside the country.
The “home industry” players used to compete with reputable multinational companies, a completely different situation today where he has to compete mainly with low-cost and substandard goods from other countries.
If the situation continues, he will have to close shop.
Brigadier-General (Retired) David Chiweza observes that the SME sector is the major peddler of non-essential imports and hence there is need for Government to consider enacting a general law that restricts imports through licensing, tariff measures or a total ban.
He further observes that “SMEs are just the same as any other company. However, of the SMEs, we must distinguish between manufacturing SMEs and trading SMEs.
“There is a major problem within the family of SMEs in that the two are attacking each other’s interests and thereby stalling the growth of the manufacturing side of SMEs. The one that imports kills the one that manufactures,” says he.
He posits that a general law restricting imports through licensing, especially those that we manufacture locally, is needed. Only 7 percent of SMEs are involved in manufacturing, according to some statistics.
There is need to reverse the tide by pushing the 7 percent to 51 percent. That is the mammoth task ahead. The traders will then be trading on goods made by the local manufacturers.
The book notes that restrictions or protectionist policies will not affect relations that Zimbabwe has with other countries arguing Zimbabwe will continue to trade normally.
Foreign companies that are trading with us are not doing so out of favour but because they are getting value from local goods.
That position will not change because of protectionist policies, says he. Essentially there is need for a balance that sees growth of new companies in domestic markets and allowing those companies that have the capability of excelling in international markets to go ahead of others, which is the natural growth of industrial competitiveness.
It has been argued that not all companies will be ready to go global and they will need to build competencies at home before they can go global.
Other thinkers like Head of Research for Econometer Global Capital Mr Christopher Mugaga believe SMEs can be trained in entrepreneurship and ensure that their products meet international standards and thus can compete with other products on the market.
There are positives to go with protectionism – that is when protectionism is not just protection for the sake of it.
Like Chiweza argues, protectionism must also act as a gate valve which is used to regulate the balance of trade especially in light of an unhealthy balance of trade as a major problem facing our economy today.
Without balancing trade, it will be difficult to introduce a local currency. In this matrix, the local currency is imperative, too.
Says Chiweza critically: “We cannot be a nation that is governed by fear of the pain of the past. Instead we must demonstrate that we are a thinking people and can equally manage the process like other nations have done. Fear should not prevent us from doing the correct thing rather it should ensure that we do the correct thing with due care.
Whatever you fear you handle it with care to ensure success. Therefore instead of shrinking because of fear, we must embrace it as a companion in our quest to reintroduce our currency.”