PROMOTING linkages between businesses is the hallmark of successful economies everywhere. This means economies with weak linkages are bound to fail as the viability of each business unit is dependent on its level of connection with other economic players.
Over the years Zimbabwe has paid the price of weakening linkages between its key productive sectors, namely mining, agriculture and manufacturing.
Experts have pointed out that the interdependence between these sectors used to be the catalyst behind a thriving economy in yester-years and that the demise of one sector influenced the collapse of others.
Industry and Commerce Minister Dr Mike Bimha acknowledged this observation last Thursday during the launch of the $50 million loan fund to facilitate the revival of Bulawayo companies that are involved in the manufacture of mining and mineral processing equipment. He stressed the need to revitalise the linkages between manufacturing and mining especially as a crucial step towards turning the country’s economic turnaround.
“Since the last decade contribution to Gross Domestic Product by the manufacturing sector has been going down. The drop in capacity utilisation has been linked to the breakdown in linkages with the mining sector,” said the minister.
“Strong linkages are crucial and today we see the launch of a sustainable facility. Value chains are strategic tools for industrialisation in the Sadc region, Comesa and the African Union.”
Dr Bimha and his Mines and Mining Development counterpart, Walter Chidhakwa, officially launched the facility at a joint function at the Zimbabwe International Trade Fair (ZITF) grounds in Bulawayo. The funding, which was sourced from Sakunda Energy, will be used to capacitate the small-scale gold mining sector and revive the manufacturing industry in the city.
We applaud this bold stance by the Government to champion revitalisation of linkages between economic sectors. Instead of sourcing mining equipment from abroad, the ministers said the fund will be given to local companies who would then manufacture the required machinery and deliver it to beneficiary miners.
We commend this desirable model, which not only speaks to the ideals of the country’s blueprint, Zim-Asset, but also provides a window for harnessing capital finance locally through synergies between economic sectors.
Given low foreign direct investment, Zimbabwe needs billions of dollars to recapitalise its key economic players, which is difficult to source from external financers. We feel the launch of the $50 million fund is in sync with the linkages approach that is closely tied to the value chain and beneficiation thrust of Zim-Asset. The initiative has rekindled hope for the revitalisation of the city’s manufacturing sector, which has for a long time suffered losses to imported machinery. Equipment imports are one of the top drivers of the trade deficit in the country at a time when the economy is facing acute liquidity shortages and a cash crisis.
We expect the funding facility to assist Bulawayo firms in retooling, which should translate to improved productivity and boost export earnings. In coming up with the funding scheme, the ministers said the Government realised the need to come up with an equitable plant and equipment distribution model that will increase plant availability and accessibility to miners.
We also applaud Sakunda Energy for coming on board to support industry and mining. Such public-private sector partnerships can catalyse growth and more gains could be achieved.
We feel it is fair for the loan scheme to be given to eligible individual miners, those who deliver their gold to Fidelity Printers, as a reward for their contribution to the economy. This means apart from increasing gold production and deliveries to Fidelity, the loan facility will facilitate capacitation of both the mining sector and the local manufacturing sector. We urge manufacturers of mining and mineral processing equipment to embrace this business opportunity and demonstrate their ability to deliver equipment at the right standards to serve the local mining industry.
As the ministers said, it is also our hope that the loan facility will encourage mining of idle claims and empowerment of small scale miners and minimise mineral leakages. The challenge now lies with the miners to prove their worth by fully utilising these resources for the good of the economy. Excited miners, through their umbrella body, the Zimbabwe Miners Federation (ZMF), have pledged to produce more to reciprocate the positive gesture by the Government.