Zim: Sadc island of economic rot

via Zim: Sadc island of economic rot – The Zimbabwe Independent May 1, 2015 by Elias Mambo

WHILE Sadc leaders met in Harare on Wednesday to discuss a regional industrialisation strategy and roadmap, Zimbabwe continues on a path of de-industrialisation with company closures and job loses intensifying making the country an island of economic failure in the sub-region.

Zimbabwe’s neighbours, Mozambique, Zambia, Botswana and South Africa are doing far better in terms of investment and growth.

Last year, the Confederation of Zimbabwe Industries (CZI) warned that de-industrialisation had reached “catastrophic levels with dire consequences for the country’s struggling economy”.

In its 2014 State of the Manufacturing Sector Survey, the industry lobby group said companies in Zimbabwe were under serious threat with capacity utilisation continuing to decline from 2013.

“The slow-down being experienced in the economy at large has not spared the manufacturing sector. In 2014, average capacity utilisation continued to decline, shedding 3,3 % points to 36,3%,” reads the report.

“An analysis of these challenges shows that the economy has failed to sustain the strong growth trajectory stimulated by the liberalisation of the foreign exchange system in 2009 after failing to attract critical offshore financial inflows (both foreign direct investment and long-term lines of credit).

The CZI report also said “FDIs would be critical for replacing the short-term expensive loans that have been granted by local financial institutions since the commencement of the multiple currency system”.

“The tight liquidity situation has further exacerbated the situation for most companies affecting cash flow positions thus affecting operations. It was the general view that there was need for a shift in policies to ensure investor confidence to drive investment inflows.”

Economist John Robertson said this week it remains a mystery why industrialisation should be on the Sadc summit agenda as Zimbabwe has been vigorously engaged in de-industrialisation for years.

“It could be argued that Zimbabwe’s de-industrialisation started with the chaotic land reform in 2000. Actually, problems were put in the way of industrialists a lot earlier than that, but a look at what land reform has accomplished for the country brings many important issues into focus,” Robertson said.

“One of the most vital of these is that the land itself, held as it was as freehold property, had collateral value that permitted the farmers to have access to as much money as they needed.

“In Zimbabwe, we appear to have a strong inclination to dis-empower anyone who displays ability and ambition. From being a country that used to export hundreds of millions of dollars-worth of goods, we’ve become importers of the same goods. Our main exports now are the bright and eager people who should be running our factories,” he said.

Robertson also said: “Re-industrialising Zimbabwe is going to be very hard work until government accepts that policies that did the damage must be removed. It should start with the most recent attack on the business sector, which is the indigenisation policy.”

Zimbabwe Congress of Trade Unions (ZCTU) secretary-general Japhet Moyo said the just-ended Sadc extra-ordinary summit on industrialisation was just a talk-show in stark contrast to the real situation on the ground.

“The Sadc meetings which are being done yearly are a platform of no significance to the ordinary people,” Moyo said. “How ironic is it that the heads of states meet to discuss industrialisation in a country experiencing the opposite.”

“Over 7 000 people have lost their jobs since January 2014 and several companies have closed shop leaving employees stranded without packages,” Moyo said adding: “Talking about industrialisation without addressing real issues that cause de-industrialisation like the policy issues is a non-starter.”

In their deliberations, the Sadc heads of states approved the Sadc Industrialisation Strategy and Roadmap and directed the secretariat to develop a detailed and costed action plan for the implementation of the strategy and roadmap.

However, while briefing the media, Sadc chairperson President Robert Mugabe urged member states to reconsider assigning individual countries areas of expertise as was the case with the old Southern African Development Coordination Conference, the forerunner of Sadc.

Without seeing the irony, Mugabe said each country was assigned a specific utility, for example, “Zimbabwe was once in charge of food security in the region.”