The Interview Christopher Farai Charamba
CC: Minister Bimha, Zimbabwe recently saw the opening of the PPC plant in Msasa as well as the BAIC plant in Willowvale. What does this mean for industry in the country looking at its current state and what can be expected going forward?
MB: I think when you get an investment, it’s basically an indication of confidence in your economy. There were times, I think in the past few years, where we were of the view that a number of investors were still sitting on the fence. They were not so sure about where we are going and a bit sceptical about Government and about our policies.
But I think the demonstration made by PPC Zimbabwe is a great start. PPC already operates in this country and I remember on one of our trips to South Africa to mobilise investment, PPC accompanied us.
They wanted to show and say to aspiring investors in South Africa that “we are in Zimbabwe, we want to do more in Zimbabwe, we will expand in Zimbabwe because we believe it’s a (good) place to do business”.
“Zimbabwe is ready for business, some of the issues that you hear are not actually accurate, it’s only when you come and participate then you find that it is the best place to be.”
They even went on to say that there is so much that is being said about indigenisation.
“Indigenisation, yes, it’s called indigenisation but you will find the same concepts used in so many countries and using different levels. We comfortably indigenise and we have no problems whatsoever.”
That promise is where they said: “Look as our indication that we feel that Zimbabwe is ready for investment we will be expanding, we will put up a new plant in Harare to be very closer to our clients.”
True to that promise we witnessed the opening of the plant in Ruwa. That is very commendable but what I think is more important is coming to invest into an area that we have designated as a Special Economic Zone, that is the industrial park of Sunway City.
And again when you get a big investor coming it opens doors for other investors to come in. We have already had enquiries from other investors who want to come and set up shop in Sunway City.
Now with regards to Willowvale, as you know, Willowvale was closed in 2012. We had an arrangement with a Japanese company and when time came for them to renew it, they said they were not keen to do so and therefore we mandated the Industrial Development Commission to look for a strategic partner.
This year we witnessed the coming together of a new arrangement between BAIC of China and IDC and also Astro Motors. This new arrangement we had to facilitate by bringing up a new policy.
We never had a policy on Semi-Knocked Down assembly operations so we had to come up with that for both Willowvale and Quest in Mutare. We had to come up with a policy to support SKD assembly. We did so by coming up with a preferential rate of duty on imported kits.
But we believe this is just the starting point of SKD. We will end up with Completely Knocked Down parts coming into this country and having a complete assembly locally.
We believe that they will be operating or building up units not just for Zimbabwe but also for the region. This augurs well in terms of exports and in terms of job creation because the more we export the more jobs we create locally.
So again it’s confidence in our economy but it is also in acceptance by investors that we are continuously coming up with policies to support the private sector, to support industry, to support production that is really more export-orientated. Those two developments are most welcome.
CC: What else can Zimbabweans expect going forward? You have spoken about inspiring confidence to other investors, are there other investors that you can name that have come aboard or that have shown interest in the industry sector?
MB: I think another aspect that is worth mentioning, you recall that last year when we came up with SI64 of 2016 initially there was an outcry. I think left, right and centre both locally and outside thought this was a bad policy and that it was not timeous.
But what we have seen as a result is that it is just the opposite. Day in, day out we are inundated by companies phoning and writing to us to say we want to thank you for SI64. They tell us that they have improved their market share, that their sales volumes have gone up, their revenue has improved, their profitability has enhanced, they have recalled workers that they had retrenched and they now have export orders.
So day in and day out we are getting feedback and companies are actually now expanding. But what SI64 has also done is give confidence to investors that the only way to get Government support is to produce in Zimbabwe rather than export goods to Zimbabwe.
So we had about three to four companies from South Africa who used to export goods to Zimbabwe who have now set up shop here and very soon we will be witnessing again the launch and official commissioning of those companies.
We have a company in Mutare, Willowton, I will be visiting that shortly just to see the progress they have made. They have come as a result of SI64 and will be making not just cooking oil, which they used to export to Zimbabwe, but also making butter and soap.
Now we have another company called Zim Kings in the industrial area here who used to export from Zambia the Boom Washing Powder, other detergents, potato chips, maheu, etc. They have now set up shop here and we believe that in three months’ time we will also be witnessing the commissioning of their new plant.
It is very modern with new technology which is exactly what we want, the introduction of new technology, the employment of people, etc. So we believe that these measures have helped to get investors to come to Zimbabwe.
CC: You’ve spoken about the benefits of SI64 and companies that have come to invest, how responsive has your ministry been though in terms of assisting companies that have taken advantage of SI64? There is the case of Dairibord, for example, which delayed the commissioning of their carbon packaging plant due to delays in getting equipment into the country. So what are some of the challenges there?
MB: The challenges that have been reported to us of late were challenges to do with the availability of foreign exchange to get the raw materials. That’s been the most significant challenge and it’s understandable.
We have though been engaging the Reserve Bank of Zimbabwe and I am happy that the Governor has been very accommodative and at times deals with some of these manufacturing companies on a personal level.
I have been made to understand that there are so many other initiatives that they are putting in place to assist. But over and above that the RBZ has come together with the ministry to encourage those companies that have benefited from SI64.
As you know, much of the rationale behind SI64 is to give time to our local manufacturers to retool and re-equip so that at the time that we say we don’t continue to support you through a Statutory Instrument, they have already improved their efficiencies, are operating normally and ready to compete.
You can’t do away with competition, it’s the order of the day. Yes, we are supporting our business for now but some day will come when they need to compete with anybody and we want to support them so that they are ready to do so.
For them to do so, they need funding and the RBZ has come up with a fund specifically to assist those companies that have benefited from SI64 and want to retool and re-equip. So that window exists and companies are free to approach us or the RBZ in that regard.
More so, for companies that are also into exports, there is additional funding coming from Comesa and other sources as well as the PTA Bank.
What we have also realised is that we can’t just come up with a policy and say it will work. We need to evaluate and monitor. That’s what the problem is sometimes with our policies, we come up with them and we let go.
What we need to do is follow up, monitor the impact and evaluate it. What we have done is to put up a monitoring and evaluating committee which comprises mainly of private sector players who then are following up on each of the companies that have benefited.
They look at the impact in terms of positives and negatives so that we can then make use of that information to review our policies and come up with other policies to buttress the same.
When SI64 came into being we had a lot of issues coming up from South Africa. If you remember, the press at that time was saying South Africa wanted to retaliate and the government was angry with us and so on.
We made visits to South Africa and had meetings with my counterpart and I think to a larger extent the South African government appreciates where we are coming from and understands what we are trying to do. But obviously they also face a lot of pressure from their private sector.
We explained our situation at Sadc and we are in the process of formalising that notification. Our point to them was it’s not that we didn’t want to follow the procedures when we took such an action, but when your house is on fire you can’t say I will leave it to burn while I go and report to the police.
What you do first is to try and put out the fire and that’s what we did. We knew that we had to follow procedure but we had to put out the fire and now we have started following the procedures.
CC: Where is Zimbabwe in terms of the ease of doing business? The World Bank put out its Doing Business Index recently and it showed that Zimbabwe had fallen off four places from 157 to 161 out of 190 countries.
Last year the National Competitive Index came out which compared Zimbabwe to other countries and showed, for example, that fixed water charge for industrial users in Harare is $80 which is 40 times what it is in Lusaka at $2. So where is Zimbabwe in terms of ease of doing business and what policies are there to correct the issues?
MB: Look, I am happy that as Zimbabwe we have started to address that issue. To me that is more important than exactly where we are. We have now begun addressing this issue, the fact that this issue is very alive in the Office of the President and Cabinet indicates the importance attached to that.
There is a lot of work that has gone into it and it’s a pity that there hasn’t been a lot of publicity. But I have attended some of these workshops where we have gone through what has already happened. I think we should now find other ways of making it public so that people realise a lot of work has gone into it.
There’s work that has to deal with amending certain laws and regulations which has already started taking place. When we looked at the first 100 days since we began, we really went up and the expectation was that when we go to the second 100 days we will see us going up but as you rightly say we have sort of slipped backwards.
But the point is not that we are not working hard, the point is that other countries are even working harder. As we are trying to chase them, they are also running away. Countries all over are working hard to improve their ease of doing business which is good.
But it also shows us that they have probably doubled the effort that we are making. We have been lagging behind for so long and any slight improvement for us is a big jump from where we are.
What we know though is that nobody is standing or waiting for Zimbabwe, they are also doing the best they can. I have been watching CNN where you find India puts advertising which says ease of doing business in India where they talk about so many days to do this and so many days to do that. Why are they doing it? They just want to tell the world that India is attractive.
That’s the way to go and it’s the business approach that a number of countries are taking. You just have to be attractive and show those who want to invest that you are attractive so that they come to you.
So I am happy with what we have done now, but what is happening out there tells us that we need to do more.
Importantly, this week I was in Parliament where I was listening to contributions from parliamentarians on our Bill that is before them at the moment on the National Competitiveness Commission. This whole issue to do with ease of doing business will be addressed once this commission is in place.
They will be looking at all factors that affect business. They will be looking at all issues that hinder the effectiveness of our private sector. They will be engaging the private sector. They will be engaging Government to say to them, this is what you have to do to make business thrive and this is what you have to do to make your environment attractive.
Therefore, we are very excited that once this Bill becomes an Act we will see this commission really starting on its work which is a lot but the work that we need to do at this point in time.
CC: Is there any indication as to when it will become an Act?
MB: Look, when you talk about an Act of Parliament it’s not something we do as a ministry, it all depends on parliamentarians and the discussions that go on but I am happy so far because we had contributions made today and I think we are moving along.
I wouldn’t really have a timetable to it but I think we are making very good progress and we will continue to encourage my fellow parliamentarians to ensure that we speed up this important Bill.
When you look at the composition of the NCC it will be mainly members from the private sector. The private sector is the one that grows the economy. It, not Government, is responsible for driving industrialisation and Zim-Asset. Government is there to facilitate.
That’s why we want this commission to say you are the guys who know where it pinches, tell us what we have to do. You were very right that we are not even competitive when it comes to even our cost of utilities which affects the prices that we then end up with. As a result, we aren’t competitive.
Now, these issues have to be addressed. We aren’t saying the Competitive Commission will come and say water is now half the price, but as they raise these issues and flag the matters, it gets the policymakers to do something about it.
Most of these issues are not issues just to do with the Ministry of Industry and Commerce, but they are very overarching, they are issues to do with Home Affairs, Finance, Water and Energy, for example. So the moment you have an authority that brings these issues on board, the better for policymakers to be able to do something about it.
CC: You spoke about Sadc, you were recently at a Sadc ministerial meeting and one of the themes was the “Sadc We Want”. Could you elaborate as to what exactly is this Sadc that you have dubbed the one you want?
MB: The meeting in Swaziland was in two parts, one was the Ministers of Trade who had to look into what is called the cost and action plan on industrialisation. How best to implement industrialisation and what it will cost for us to do the work.
We considered this cost and action plan and recommended that it goes before the Heads of State and Government who then approved the $103 million budget for industrialisation. But that is industrialisation at a regional level.
Now we also agreed that we are now looking at industrialisation in three components. The first is value addition and beneficiation, the second is competitiveness which I have been talking about. At a Sadc level it’s now an issue because we cannot talk of industrialising unless we address issues of competitiveness in our region.
The third component is regional integration which makes a lot of sense. If you industrialise and you are competitive it makes sense for you to now realise regional integration. That was the first part of our meeting which was then followed by the “Sadc We Want”.
This was more of a strategic planning session and at the end of it there is not much change in terms of what we are already doing. It was focused on looking at ways of speeding up the implementation.
We are happy with what we have at the moment in terms of our industrialisation taking a centre stage and these other components that I have mentioned. The focus was more on the fact that to do this we need funding.
In the past Sadc received funding from development partners but we can’t continue to do that because the moment you are funded by outsiders you can’t avoid being dictated to and compromised. We are not saying we don’t want support but we need to create funding for ourselves.
The presenters who came also demonstrated that we have the resources and we can do it, we just need to find better ways of doing it. There we want to look at how and there were a number of measures that were proposed but we felt that we could not just agree on one or two or three but we need to synchronise with other measures being taken at AU level.
As you know, the AU has also taken that stance to say let’s try to fund ourselves. At the time that His Excellency President Mugabe was Chair, he was championing this issue saying that we cannot continue to ask for other people to fund us and yet we want to be self-sufficient and make our own decision. How can we do so when we depend on them giving us resources?
There was some agreement on some levy or duty on imports and exports, I’m not too sure but this is the way we are going. There will be a meeting of the ministers of finance to revisit these presentations. There were options that were made for them now to look at them, distil them and advise the summit accordingly.
So the “Sadc We Want” is still the same, we look at industrialisation and competitiveness, we want to integrate as well. We want to see more movement of people and goods. Our business people, our students and everyone else should be allowed free movement within the region.
We will only realise this if we can resource Sadc in a better way. What we also agreed is that to drive this industrialisation agenda, we should also look at our Secretariat and make sure that it is strengthened so that they have a unit which solely deals with industrialisation.
What this means is that even at national level we have to conform. I will be having meetings to have your CZI, ZNCC and other business organisations come together and ask how do you, as private sector, drive industrialisation? How do you constitute yourselves? Do you drive in your fragmented way or should we come up with a forum of private sector players just to focus on the implementation of industrialisation?
CC: How far has Zimbabwe come in terms of aligning its industrialisation strategy with that of Sadc and Comesa because that’s another regional body that we are part of?
MB: We are very lucky in Zimbabwe because when you look at the industrialisation strategy of Sadc and its roadmap, it speaks to Zim-Asset. Therefore, what we are doing at Sadc is more of Zim-Asset magnified.
When you get to Comesa, it is looking at establishing at Tripartite Free Trade Area and one of the pillars of achieving that is industrialisation. If you go to the African Union, we talk of Agenda 2063, again industrialisation is really the driving force. Therefore, it fits well into our national strategy and economic blueprint, Zim-Asset.