eBusiness Weekly
Innovation in the industrial sector has become a bit of a catchphrase in some minds, but it is a crucial concept that needs to be at the forefront of those who own and run the businesses in that sector, and those who wish to enter industry.
There is a tendency for many to resist change, to want to keep what is familiar, and even where change is accepted, very often this is looking at the latest models of processing and industrial machinery, rather than at the processes themselves, or the processes that should be in place, or even the creation of whole new businesses starting with the mining or farming of the main raw materials.
In some ways it is odd that industrialists tend to be so sensitive over the availability of materials, especially when you think about the major suppliers whom they want to pay, and for most the zero or low exports they generate to earn their own foreign exchange.
South African companies tend to be major suppliers. Yet the South African industrial base was weak until the Second World War, grew moderately during and after the war, and accelerated into overdrive during the apartheid era when the apartheid regime made determined efforts to localise as much manufacturing as possible.
The Chinese economy in global terms was fairly small, with exports of finished products always on the low side. There was a time, as recently as the late 1970s, when the province of Taiwan exported considerably more than all the mainland provinces combined.
That has obviously changed dramatically with the economic reforms from around 1980 that converted China in the world’s greatest manufacturing economy, but it does show that progress is possible.
The faults of the colonial era still seep through to the modern economy, along with its successes. For a long time those in control of colonial Rhodesia, first the British South Africa Company for 33 years and then the local elite, mainly the large landowners and the professionals for another 40 years, saw the country as a producer and exporter of raw materials and an importer of finished products.
Some local service industry was required, and then some manufacturing arose largely in secondary industry, but this was never a priority, even during the Second World War when markets were created and the problem of running supplies of non-food items through the U-boat wolfpacks was severe.
In that war and moving into the 1950s there were attempts to support some industrialisation, again with the needs of farmers and miners to the fore, but a modest range of goods for the urban markets.
Manufactured exports were even in those days low, and largely into what people thought was the hinterland, Zambia and Malawi now in the Federation of Rhodesia and Nyasaland.
The huge change came with UDI and mandatory UN trade sanctions. Import substitution then became the driver of industrial growth, under an exceptionally protective system.
If you could figure out a way of making the substitute locally using less foreign currency than the finished product would cost, you got the go ahead and the protection of a ban on the imported product.
Significant innovation was generated. Often second-hand machinery had to be imported, and often this was of an earlier technological generation, one that was more labour intensive. But then, outside the skilled artisans, labour was abundant and cheap.
The major income divide in the colonial era was between the semi-skilled brackets and the skilled brackets, with skills being defined as deriving from a four or five year apprenticeship backed by success in polytechnic examination and usually requiring at least four years of high schooling.
While in the 1950s some care had been taken to removing racial language from labour categories, the reluctance to extend post-primary education for blacks beyond form two, meant there was only a small group of blacks with O level, A-level or degrees, and most of those were encouraged to go into teaching and nursing, not skilled artisan training. White skilled workers were a major cornerstone of the RF.
So the labour intensive processes worked, so long as most of the labour could be categorised as semi-skilled, and in case was paid in local currency. We even had spare parts hand-made by the small group of skilled workers, so the older machinery was kept going, at least for a while.
But despite the shortage of capital and capital equipment, there was a huge industrial boom. Many of the industrial business owners were not supporters of Ian Smith, the RF or UDI, but they felt they had a national duty to make stuff, and they did.
As one put it: “It is a bit like your unmarried daughter falling pregnant. You cannot possibly approve, but you cannot throw her into the street.”
Exports remained largely raw materials, although there was more mineral processing in the country to add value and reduce bulk, important when you had to sell as a discount and try to make the piles look less conspicuous.
Independence gave the new Zimbabwe a good start, but with the weakness of undercapitalised industry and too great a reliance on older equipment and aging technologies.
The import controls remained, so the protection was there, although labour law was drastically reformed and the old divide preventing the semi-skilled acquiring skills certification removed. So it worked for more than another decade.
Then came ESAP, and the possibility of upgrading the industrial base and reinvesting in new machinery, new processes and new technologies. And it was wasted. A lot of ESAP money, sold on auction, went into importing finished products instead.
Some of this was the fault of industrialists, who did not press for re-equipment to be the priority rather being willing to carry on with what they had. Some were also too used to having a monopoly of lower quality and higher prices, and consumers obviously turned against them when imports appeared. But some consumers would buy anything so long as it was imported and so of higher status. Blame needs to be shared.
Hyperinflation and dollarisation hammered industry further, and a lot of factories closed. Some protection was restored, and the Second Republic has made serious and successful efforts to back local industry. But industrialists have not universally embraced the concept of innovation instead preferring to import raw materials for extra processing, rather than harnessing what is available.
Import substitution is still an important option, but it needs to be applied differently now, by creating products that can compete with imports and eventually compete in the African stage. This might well require creating links with farmers and miners so the right materials are available, rather than expecting “the Government” to provide.
Free trade within Africa is coming so brands need to be created and built up, processes worked out to ensure quality is high and prices are competitive, and generally to rely of having the right products of the right quality at the right price. Some have been successful, but a significant fraction of the successful are relative newcomers, both local and foreign investors, rather than those who came through the UDI era, some of whom still dream of the old-style business environment.
What can be harnessed from that era was the eagerness to grab opportunity and the very high levels of innovation required to convert a policy to a factory. The fastest industrial growth in the country’s history came in the first decade of UDI, but the way it was done is not the way that growth can be repeated. We need quite different methods to move forwards as fast.
But the pool of talent in Zimbabwe is far, far higher than the pool in UDI Rhodesia with its limits on advancement for the vast majority of the population. We now have many more engineers, many more skilled people, and far more possibility of finding someone who can put together resources, technology and labour to make the right products.
Government policies are important, perhaps the most important being to allow farming and mining to expand while insisting of beneficiation before export, as well the State universities under orders to figure out new technologies and to create to ways of processing local materials.
But the private sector will have to do the hard work of industrial production, and this might well require a new way of looking at business in many concerns, along with more people being willing to enter manufacturing and create new businesses, making their fortunes perhaps but doing so by making something people want to buy, in Zimbabwe and elsewhere. And that change requires people thinking of Zimbabwe as the workshop of Africa, not the supplier of raw materials of Africa.
