LOCAL products promoter, Buy Zimbabwe, is pushing to localise 50% of public procurement to support the local manufacturing sector.
The move, if implemented, will see an increase in the uptake of local products which will subsequently increase capacity utilisation.
The plan, according to Buy Zimbabwe chief executive officer Munyaradzi Hwengwere, will pivot the country’s ambition to boost local content.
“We think that we must meet a minimum of 50% local content in the shortest period of time, and we believe that if we go to 60% or so, we will attain upper-middle-income status at a higher level because upper-middle-income has a low end and a high end,” Hwengwere said on the sidelines of a Buy Zimbabwe Public Procurement Conference held in Harare last week.
He said the current slow uptake of local products would see Zimbabwe attaining an upper-middle-income status by 2030, but at a low base.
There is no doubt that local industries need support by increasing the uptake of their products.
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Support should not come on a silver platter. They need to step up and ensure that their products meet the standard and the price is also competitive. They should exorcise the profiteering demon that has afflicted local companies.
An economy that is battling foreign currency shortages will be shooting itself in the foot if it turns out to be a supermarket of foreign products that have local equivalents.
Government must take the lead by decreeing that ministries, departments and agencies must go local which will go a long way in increasing the uptake of local products. When that happens, local companies will expand capacities, create more employment opportunities and pay more taxes.
In 2019, Cabinet approved the Zimbabwe Local Content Strategy, a component of the country’s industrialisation policy that seeks to promote local value addition and linkages through the utilisation of domestic resources. The critical strategic actions will include preferential local procurement, capacitation of local suppliers and capacitating research and development institutions and the establishment of plants for the transfer of technological know-how, Cabinet said then.
Government said the strategy sought to increase local content levels in prioritised sectors to around 80% by last year from about 25%.
The strategy also sought to increase capacity utilisation in prioritised sectors to 75% by end of last year from 40%.
It also sought to increase manufacturing exports in prioritised sectors by 5% per annum.
However, it seems the wheels have been moving slowly due to government's half-hearted stance.
Local manufacturers have been battling economic headwinds such as foreign currency shortages and regulatory bottlenecks.
Despite 46% of companies investing to boost their capacities last year, up from 40% in 2022, there was no corresponding increase in output, according to a Confederation of Zimbabwe Industries manufacturing sector report released recently.
Resultantly, capacity utilisation dropped to 53,2% last year from 56,1% in 2022.
Regulatory burden, according to the report was an albatross on companies, accounting for 17,9% of overheads.
These hurdles, coupled with a half-hearted government stance on local content strategy, mean that our local industries will be incapacitated to compete in a bigger market created by the African Continental Free Trade Area.