SPEECH BY THE HONOURABLE MINISTER OF INDUSTRY AND COMMERCE, PROF, WELSHMAN NCUBE ON THE OCCASION OF THE COMMONWEALTH BUSINESSS COUNCIL: 6 JULY 2009: LONDON, UNITED KINGDOM
His Excellency, Paul Kagame, President of the Republic of Rwanda The Chairman, Mr. Paul Skinner Captains of Industry and Commerce Distinguished delegates Ladies and Gentlemen,
It is my pleasure and indeed honour to be present here at the Commonwealth Business Forum – Africa Business Forum 2009 where business and government leaders are gathered to discuss and find ways of promoting growth and development in Africa. Mr. Chairman, your meeting is particularly relevant and well timed, coming at a time when Zimbabwe is actively trying to turnaround the fortunes of the country.
As you may be aware, on the 15th September 2008, the three Political Parties represented in the Zimbabwean Parliament signed the Global Political Agreement which gave birth to the inclusive government.
The new inclusive Government came into office facing an economy that was recording negative growth rates and severe macroeconomic challenges.
Noting this, the new Government had to attend to the structural failures and to resuscitate and rehabilitate the economy. As part of its obligation to address the economic crisis, the new Government came up with the Short Term Emergency Recovery Programme (STERP), a recovery blue print, which itself is a creation of the Global Political Agreement. STERP is therefore an emergency short term stabilisation programme which the new Government saw as a smart partnership for economic revival.
The parties had to come up with an emergency salvage plan that is necessary to address the failures of the economy. The key areas to be addressed by STERP are:
1) Political and governance issues (constitution, media and legislation
2) Social protection (food, education, health)
3) Stabilisation (currency restoration, availability of essential commodities, increasing capacity utilisation)
STERP is therefore anticipated to deliver more than the basic rehabilitation of the economy but also lay down the foundation for a basic democratic African State and create a viable and self sustaining social sector which will generate jobs for the people.
Mr. Chairman,
Let me hasten to mention that as l speak now, the country is in the process of drafting a new constitution which will address some of the imbalances inherent in the current constitution.
Furthermore, it is imperative that we get Zimbabwe working again by restoring the normal capacity utilisation of our productive sectors. This will ensure more employment, disposable incomes, savings and greater vibrancy in the economy.
In this regard, the major pillars of priority number three – stabilization, under the Short Term Emergency Recovery Programme are the Empowerment of the Productive Sectors, the Revitalization of the Enablers that are so critical to the Productive Sectors (such as utilities and infrastructure).
The inclusive government is geared to transforming Zimbabwe into a progressive developmental state, through the promotion of production and increased capacity utilisation in the main economic sectors, namely Agriculture, Mining, Manufacturing and Tourism.
Myself as the Minister responsible for commerce and industry have the mammoth task of revitalising the manufacturing sector.
The manufacturing sector is the epicentre of any economic stabilization programme. It was the biggest contributor to the Gross Domestic Product (GDP) in 1980 at 22% followed by agriculture at 14%. Due to the economic crisis, its contribution has declined to below 17%.
In terms of capacity utilisation in the manufacturing sector, my Ministry is targeting companies in the food processing, beverages, textiles and ginning, clothing and footwear, paper printing and publishing, chemical and petroleum industries with the aim of facilitating increased production of goods from 10% capacity to 60% by year end.
Critical to the attainment of the objective of STERP is resource mobilisation. The inclusive Government has positively engaged regional groupings, SADC and COMESA and the international community at large for extension of possible lines of credit.
At this juncture, let me express my appreciation to both these groupings, SADC and COMESA who have availed to us some lines of credit.
The credit facility would be utilised in the importation of raw materials, and equipment for retooling, amongst other things. Although the global financial crisis is affecting Europe, we believe that you have better space to avail lines of credit. Zimbabwe would be grateful to get such advances as the country is currently operating under sanctions.
Mr. Chairman
As l have alluded to earlier, Government is also aware of the importance and centrality of the utilities in sustaining industrial output.
These will also be given lines of credit. There will be greater accountability on the part of utilities and monitoring of the utilities on the part of responsible line ministries and strict deadlines for repayment of the loans will be adhered to. Corporate governance during this era becomes the hallmark of business practice.
Greediness and corruption should be taboo to every right minded business person. Government would henceforth be an exemplary preacher by not practicing what it denounces in public. The same goes to public office bearers in Non-Governmental Organizations and Civic Organizations.
Price controls. Some of you may be aware that one of the major policy issues that the local industry has always attributed to their underperformance has been the thorny issues of price control, the application of which, reached its peak in 2007/2008.
l am glad to restate that Government has since abandoned price controls as an instrument of economic policy.
The other policy measures available to Government, intended to assist industry to raise its capacity utilisation to achieve the STERP targets include, Toll Manufacturing and Import Substitution and Value Addition.
With respect to the first and in order to enable industries to utilise idle capacity, Government is encouraging companies to undertake toll manufacturing.
This can be done with either local companies or foreign ones. I am pleased to inform you that already, a number of companies in the fertiliser and food sectors are running toll manufacturing arrangements with foreign and local entities.
As with the other two measures, and in a bid to encourage both the saving of the much needed foreign currency and ensure competitiveness of Zimbabwean products on the export market, Government launched an Import Substitution and Value Addition Taskforce in 2006 which gave way to the hosting of Import Substitution and Value Addition Expos in the past two years.
The expos also known as the buy Zimbabwe campaign have a major motive of instilling peoples’ confidence in local products that the local industry produce.
Many opportunities for value addition activities exist in great abundance in the manufacturing sector since at present a considerable number of products are exported before undergoing value addition necessary for generating high returns.
Vast opportunities exist in agro-processing (processing of tobacco, cotton, soya beans, paprika, sugar milling and fruit canning). Further investment opportunities are available in the mining, tourism and agriculture sectors.
On the regional front, Zimbabwe has acceded to the COMESA Customs Union. With the coming in of the COMESA Customs Union, Industry and Commerce will get a reprieve in that the much flagged high customs duties imposed by the Zimbabwe Revenue Authority (ZIMRA) which was taunted as the causal effect of cost push inflation.
These high duties are going to be replaced by a common tariff regime where in all goods traded between COMESA member countries will not attract any duty at all whilst goods sourced from non member countries will attract a common tariff of zero for capital goods and raw materials and 25% for other intermediate and finished goods.
One way to look at this is that industry and commerce will have its costs of landing goods in Zimbabwe reduced drastically as compared to yester year.
Above board, all signs point to the fact that our economy has all the attributes to emerge from the murky waters if only there is cooperation and assistance from our development partners.
I would like to take this opportunity to inform the international communities that Zimbabwe is indeed committed to come out of the woods and to the creation of a conducive business operating environment wherein businesses can thrive and grow.
My government will continue to consult with all interested stakeholders to ensure that Government put in place policies that address all concerns with a view to stimulating positive growth of our economy.
I would like to further challenge the private sector here present to take advantage of the unfolding business opportunities in Zimbabwe. The inclusive Government assures you of the security and growth of your investments in my country.
Mr. Chairman
Let me end by thanking you for the opportunity you have given me to present on some of our policies on this topic.
I thank you.
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