Manufacturing key to growth: CZI

CONFEDERATION of Zimbabwe Industries (CZI) president Sifelani Jabangwe says the country should focus on developing its manufacturing sector to grow the economy.
The southern African country’s economy is agriculture-based and has in recent times started to rely more on mining, with mostly raw produce from these sectors dominating exports.
“The manufacturing sector is an area where we have to fight to be a key player in because all these other countries would like to use Africa, including Zimbabwe, as a source of raw materials,” he told delegates at the Institute of Internal Auditors Zimbabwe annual conference last week.
“One of Zimbabwe’s biggest challenges is that our exports which are our source of forex are dominated by commodities. The challenges of such a profile are that we are susceptible to commodity cycles, so when there is a boom you will do well but when the cycle drops you suffer,” he said.
Jabangwe noted that economies that rely heavily on commodities do not produce much value relative to earnings from value added products.
“When you take iron ore from the blast furnace, the price will be about $800 per tonne because it is a commodity. So generally speaking, for each mobile phone we import we need to export a tonne of iron ore. We will not make much money doing this, we need to make the products from which the iron is made,” he said.
The CZI boss also emphasised that a mining focused economy does not create enough jobs to absorb the unemployed.
“The other challenge with mining is that the average profit margin is about 20 percent. Last year, revenues from mining were about $2,4 billion. You will find that about 80 percent of that was for goods and services used in the sector, of which a significant portion would have been imported from other countries.
“So we need to get the local industry to be linked to what is happening in the mining sector so that we can tap into a significant portion of that 80 percent,” he said.
Apart from mining, the other major anchor of the southern African nation’s economy has been agriculture.
“Even agriculture, yes it does create jobs but these are low income jobs. But the manufacturing sector has the capacity to create quality incomes and this depends on what is termed the ‘complexity of the economy’, how complex is your industry, the simpler it is, the more basic the incomes,” said Jabangwe.
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