The decline of Zimbabwe’s manufacturing
Posted by CM on June 29, 2007
It is understandable that the reports of the events in Zimbabwe that get the most exposure are those of the political and day to day economic struggles of ordinary people : abuse by police, the effects of the shocking inflation and so forth. As horrific as all these are, after change and normalization, time will heal these wounds, as difficult as it is for the people suffering the deprivations.
But some of the effects of the present mess that will be long-lasting and more difficult for the country to recover from are some of those that by their nature do not get as much attention. An example is the report about the decline of manufacturing featured in the Financial Gazette of June 28, 2007 :
Local manufacturers face extinction
Manufacturers of controlled commodities could easily be wiped off the ace of the domestic market unless something is done to correct price distortions that favour imported products.
Local products are fast losing ground to foreign ones, which can land locally at much more competitive prices. The trend has posed an imminent threat of more job losses, company closures and de-industrialisation of significant proportions unless swift action is taken to rid the market of price imperfections.
Except for bread, mealie-meal and sugar, — whose landed cost is higher than the retail price — consumers can enjoy huge savings by importing from any neighbouring country rather than buying locally. This trend cuts across all locally manufactured products surveyed, such as bath soap, cooking oil, washing soap and chicken among other things.
Their quality has deteriorated as well, due to sub-economic prices that are forcing manufacturers to cut corners in order to minimise losses.
Unfortunately, there is nothing new about this trend. It has been getting worse for several years now, and companies who have found a way to hang on in Zimbabwe over the time must be commended for their heroism.
The kind of de-industrialization that is subsequently taking place is very difficult to replace. Manufacturing capacity that Zimbabwe built up over decades is being frittered away in a few years. It was one thing to experience these problems hands on as a budding entrepreneur who saw his business initially grow in leaps and bounds and then simply fail to cope with all the economic distortions. It is quite another to have travelled a good part of Africa over the last couple of years to realise how rare on the continent that manufacturing capacity is, and how even now, Zimbabwe has enviable capacity.
But once it is gone, as it is going now, re-building it will be a long, tough slog. I have been surprised to visit capital cities where you almost cannot find anything at all, no matter how simple, that is built locally. Where the highest level of business to aspire to is to be an importer, because the idea of making anything simply never took hold in the economy or the national conciousness. Where whatever few exports there are of primary, raw materials because the country does not have the capacity to value-add. Being in such countries, of which there are unfortunately many in Africa, brings it home to you how difficult it is for these countries to move to the next rung of “development” with all these limitations.
And yet here is Zimbabwe, throwing all these advantages away, seemingly without a thought for tomorrow. Foreign brands get entrenched in the economy and sooner or later people forget that we ever had local equivalents. Even when things “normalise,” it will be very difficult for resuscitated local manufacturers to compete against the foreign brands, with vast socio-economic consequences for employment creation, general competitiveness, pride and so forth.
We will pay for our folly for a long time to come.