Economy Uncensored with Tapiwanashe Mangwiro
Zimbabwe stands at a crossroads in its industrialisation journey. With a rich endowment of natural resources and a young, educated workforce, the country has the ingredients for a thriving manufacturing sector.
However, persistent structural bottlenecks ranging from infrastructure deficits to monetary instability continue to hinder progress. If Zimbabwe is to realise its industrial potential, policymakers must adopt a strategic, long-term approach that prioritises stable monetary policies, investment in infrastructure and value addition in key industries.
Monetary stability: A precondition for industrial growth
A key obstacle to Zimbabwe’s industrialisation is its monetary volatility. Frequent currency shifts, high inflation, and unstable exchange rates have eroded business confidence and deterred long-term investment. The country’s history of hyperinflation, exacerbated by excessive money supply growth, aligns with the Quantity Theory of Money (QTM), which argues that inflation is directly proportional to increases in the money supply.
While the authorities have made attempts at currency stabilisation, uncertainty remains a significant deterrent to industrial expansion.
A more predictable monetary environment is essential for industrial financing. The high cost of borrowing, driven by elevated interest rates, stifles manufacturing growth.
Zimbabwe could take lessons from South Korea’s industrial financing model, where development banks provided long-term, low-interest credit to strategic sectors, accelerating industrialisation. Establishing a more effective industrial development bank in Zimbabwe could provide much-needed capital to manufacturers and exporters, fostering sustained growth.
Infrastructure and energy: Breaking the logjam
No industrial economy can thrive without robust infrastructure. Zimbabwe’s unreliable electricity supply, aging transport networks and high logistics costs have placed manufacturers at a competitive disadvantage. Frequent power outages disrupt production, increasing the cost of doing business.
Economic theories such as Rosenstein-Rodan’s Big Push Theory suggest that underdeveloped economies require large-scale infrastructure investments to achieve industrialisation.
Zimbabwe must accelerate public-private partnerships (PPPs) to upgrade energy infrastructure and invest in renewable energy projects.
Given the country’s abundant sunlight and hydropower potential, targeted investments in solar and hydroelectric energy could provide long-term stability to the industrial sector.
Similarly, improving rail and road networks is crucial. Zimbabwe’s landlocked position means that efficient transport corridors to regional markets, particularly through the African Continental Free Trade Area (AfCFTA), are essential for industrial competitiveness. Investments in modernising the Beira and Durban trade routes would reduce logistics costs and enhance export potential.
Value addition: Moving beyond raw material exports
A major structural weakness in Zimbabwe’s economy is its reliance on raw material exports.
The Prebisch-Singer Hypothesis argues that economies dependent on primary commodity exports experience declining terms of trade over time. Zimbabwe’s continued export of unprocessed minerals, such as lithium and platinum, means the country is missing out on substantial value addition.
A shift toward beneficiation where raw materials are processed into finished products domestically, could transform Zimbabwe’s industrial landscape.
For example, instead of exporting raw lithium, Zimbabwe could develop a battery manufacturing industry, tapping into the growing global demand for electric vehicle components. Similarly, the gold and platinum sectors could benefit from local refining and jewelry production, creating higher-value exports.
To encourage this shift, the Government must provide incentives for domestic processing, such as tax breaks and import duty reductions on capital equipment. At the same time, trade policies must be recalibrated to encourage industrial exports, leveraging AfCFTA to access larger African markets.
Technology and Skills: Preparing for the Fourth Industrial Revolution
Industrialisation in the 21st century is not just about factories and machinery; it requires investments in technology and human capital.
The Solow-Swan Growth Model emphasises that technological progress is a key driver of long-term economic growth. For Zimbabwe, this means prioritising research and development (R&D), fostering innovation, and modernising industrial processes.
At present, Zimbabwe’s manufacturing sector lags in automation and digital adoption. By incentivising investment in Fourth Industrial Revolution (4IR) technologies, such as artificial intelligence, robotics, and smart manufacturing, the country can enhance productivity and efficiency. Furthermore, partnerships between universities and industries can help develop a workforce equipped with the skills required for modern manufacturing.
Conclusion: A strategic, long-term approach
Zimbabwe’s industrialisation drive requires more than just rhetoric; it demands policy consistency, investment incentives and strong public-private collaboration.
Stabilising the monetary system, investing in infrastructure, promoting value addition and embracing technological advancement are critical to unlocking industrial growth.
Industrialisation has been the foundation of economic transformation in countries such as China, South Korea, and Malaysia.
Zimbabwe must now make a concerted effort to follow a similar path. If the right policies are implemented, the country has the potential to transition from an unstable, resource-dependent economy to a thriving industrial hub in the region. The challenge is clear, now it is time for action.
Tapiwanashe Mangwiro is a resident economist with the Business Weekly and writes this in his own capacity. @willoe_tee on twitter and Tapiwanashe Willoe Mangwiro on LinkedIn
