Quality thrust needed to push industry

28 Jan, 2022 - 00:01 0 Views

eBusiness Weekly


Last Word

The new policy being finalised to give priority to raising the quality and standards of Zimbabwean-made products marks a significant switch over what Governments have been pushing for more than 55 years and allowing before that.

The stress since UDI has been on local manufacture and if quality went down, then that was the price to pay for import substitution. In any case for a good many of those years Zimbabwean consumers did not have the option, and when they did generally import duties were supposed to keep back the imports.

The one problem was that often the Zimbabwean product was both lower quality and pricier, either because we were using the US dollar as our currency or because the exchange rate was set artificially low. So we would have the situation where an import could be both cheaper and better.

ESAP in the 1990s and dollarisation in the late 2000s did provide a wake-up call as a fair number of companies went under or were forced to cut back production as imports became possible. Zimbabwean consumers made it clear that the attitude of take it or leave it was no longer acceptable. 

With the return of the local currency there has been a major trend of more local production and at least giving value for money and where possible giving good quality at a reasonable price.

The second element that needs to be developed is exports. Most of Zimbabwean exports are primary products, in particular minerals and tobacco. Manufactured exports, while rising significantly, are still low in total sales and as most of our neighbours can now produce many of the basics themselves the markets seem limited unless we can do something special.

Industry and Commerce Minister Dr Sekai Nzenza thinks we can do something special and we can press hard on the quality issues.

The first constraint identified is the lack of investment in updating manufacturing equipment. Again for the last 55 years making the old equipment function, and replacing when necessary with second-hand machinery dumped by someone else upgrading, have been seen as something positive. This is usually no longer the case. 

The reason others have modernised or replaced functioning equipment is because they want to upgrade the produce and reduce the costs so they can sell more in an environment that is ever-more competitive. Dr Zenzi outlined a number of paths that could be used to pump in more capital and businesses might be able to come up with more.

The second path that needed opening was to start using more Zimbabwean raw materials to make finished products, or at least process these into intermediate products before export. We should, fore example, never export ores or even concentrates but rather bars of metal with certified levels of purity.

Tobacco already sees some local processing and grading, but there is still the argument that we should be exporting cigarettes rather than leaf. This brings in other factors, Many international brands are blends of leaf from several countries, but there are also single nation blends, like almost all cigarettes sold in Zimbabwe, and we need to create brands so we have both markets.

We should be exporting cloth rather than cotton, and better still have a significant manufacturing input by exporting shirts and other garments amidst the cloth and thread.

But now that we are talking about 85 percent of the goods on Zimbabwean supermarket shelves being locally manufactured we need to start working out how we can export products as well. 

Some of the manufacturing is little more than packing; rice is a good example. Other products have a lot more Zimbabwean input and we need to build on that, and this is where the push for quality is so important. 

We can see how it works when we look at the minority of imported goods on our supermarket shelves. Besides the South African products that many might expect, there is a fair swathe of goods from Egypt, Kenya and Zambia, plus some Mozambican plastic ware. 

The Egyptian products are local brands, but with packaging designed for export since English lettering is larger than the Arabic. The Kenyan, Zambian and Mozambican products appear to be made in factories recently built with new investment, with the Kenyan range largely made by major multinationals.

Zimbabwe was left behind in some of this expansion of African industry, largely because the previous dispensation had this obsession with local ownership and thought, wrongly, that a major investor would be quite happy to hand over a chunk of the shareholding, a controlling chunk if you please, for free to some well-connected individuals.

With the Second Republic this has obviously changed. So long as the investor is prepared to pay taxes and at least the minimum wage negotiated for the particular sector, a red carpet is rolled out. The country benefits from both the extra jobs and from the extra exports. 

The one point where these countries are fairly tight is that common international policy that almost all the staff should be local. Obviously the investor and a couple of other experts can be given work permits, but generally the staff should be Zimbabwean. This is not something any investor wants to fight.

The can hire at the upper end of Zimbabwean wage scales skilled managerial and technical staff at less than what they would have to pay to bring in a foreigner, and they do not have to fly that staff “home” every few months or pay fancy school fees in the home country.

The upgrades in technical education in recent years on a fairly firm base will also help, both in attracting the investment and in local firms upgrading. When you can hire people with the skills you need almost off the street, this essential input is already met.

One problem for boosting exports is to get brands recognised. One Zambian exporter has managed this spectacularly well, to the extent that they can charge the premium that a decent brand attracts. The Kenyan exporters tend to ride on the coattails of their global multinational. You do not have to choose a strategy. Both can be followed.

But regardless of what an individual business might choose, the main thrust must be quality. And if we can develop the national brand, made in Zimbabwe, as a quality brand then we are racing ahead. We need to get to the stage where the reaction, locally and in export markets, is that if it is made in Zimbabwe it must be good.

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