Mujuru urges companies to be innovative

Vice President Joice Mujuru last week urged Zimbabwean manufacturers to be more innovative because local demand was likely to remain low due to limited disposable income and financial liquidity challenges.

She told delegates to the Zimtrade Exporters Conference that the government was going to do everything it could to boost manufacturing so that it could get back to its position as the main contributor to growth.

Manufacturing currently accounts for only 16 percent of exports while mining dominates with 50 percent. The government had already put in place an Industrial Development Policy and National Trade Policy which were aimed at transforming Zimbabwe from a producer and exporter of primary goods into a producer of processed value-added goods and services.

The policies are aimed should see the country’s exports increasing by at least 10 percent annually, from US$4.3 billion in 2011 to US$7 billion in 2016. During the same period the manufacturing sector’s contribution to export earnings should increase from the current 16 to 50 percent by 2016.

“Industry and commerce need to adopt and adapt to cutting-edge science and technology solutions to meet the demands of the ever-changing consumer needs and wants. Intense research and development and business-to-business networking is critical in order to allow and improve information sharing and technology transfer,” Mujuru said.

“In this regard, I call upon you, the business sector, to redefine your business models and adopt innovation strategies as a way to sustain competition. Companies need to invest in relevant technologies to improve on productivity and quality of goods and services in order to take advantage of export opportunities in the region and beyond.”

Mujuru said the government would work to enhance trade facilitation in order to expedite trade flows by reducing or eliminating barriers to trade but added that due to limited disposable income for domestic consumption and financial liquidity challenges, coupled with limited and costly access to capital, internal demand for goods and services was expected to remain low.

“It is, therefore, important to access regional and international markets in order to benefit from economies of scale. Revision of business models towards competitive production of higher quality value-added goods and services with an export orientation, is paramount to the sustainable economic growth and development of Zimbabwe. This is more critical now as markets are opening up thereby increasing competition,” she said.

Below is Mujuru’s full speech:

KEYNOTE ADDRESS BY THE HONOURABLE J. T. R MUJURU VICE PRESIDENT OF THE REPUBLIC OF ZIMBABWE, AT THE ZIMTRADE EXPORTERS’ CONFERENCE
24 OCTOBER 2013

On behalf of the Government and people of the Republic of Zimbabwe, l am pleased to welcome you all to this occasion of the ZimTrade Annual Exporter’s Conference. I would like to extend a very special welcome to our valued exporters. Let me take this opportunity to congratulate the ZimTrade Board and Management for successfully organizing and hosting this prestigious event in honour of our distinguished exporters. I am glad to note that ZimTrade has turned the exporters’ conference into an annual event as was the case previously. I hope you are impressed by the organization of the event and that most of you managed to network and engage as various stakeholders. Your presence at this conference and continued support is highly appreciated as it contributes to making this event a success.

This Conference is taking place amid improved macro-economic environment as the Government continues to put in place measures that stabilize the economy.

We all agree, Zimbabwe has declined as a regional manufacturing hub. We had turned into one huge warehouse, a dumping ground for all manner of imports. Our cities and towns were almost dead. Bulawayo, for a long time has been the industrial capital of Zimbabwe, has now become a sorry industrial scrap-yard. And this has been an indicative trend for all manufacturing centres in the country.

Our financial system or policy will need to be examined including the banking institutions and their supporting role to industry. Partly as a result of sanctions and partly because of regional manufacturing and trade dynamics, we had become a net importer of finished goods, while also being a net exporter of raw materials.

The Government needs to tackle this structural handicap head on, as a matter of urgency. Elections come and go and the era of the inclusive Government is gone too and we must now move purposefully.

The past decade has also seen Zimbabwe’s trade performance characterized by negative trade balance since 2002. However, a gradual economic recovery has been experienced since 2009, export earnings have increased to US$4.3 billion in 2011 underpinned by favourable international commodity prices and improved output of export commodities from agriculture, mining and manufacturing sectors. The import bill has also increased to $5.6 billion in 2011, with food imports on the decline while non-food imports are on the rise.

While the agriculture and manufacturing sectors have previously been the main contributors to export earnings, these have, of late, been over-taken by the mining sector, that now accounts for around 50% of the country’s total exports. In terms of trading partners, South Africa remains Zimbabwe’s single largest trading partner accounting for at least 40% of total exports and 60% of total imports. China is now the third most important market for Zimbabwe’s exports after South Africa and the European Union.

The current account deficit still exists, with imports far exceeding exports in value terms. This calls for urgent action to improve the trade balance through robust export performance. This can only be achieved through exports that are competitive on the export market. In addition, since the country will continue with the multiple currency system, there is more need for foreign currency than ever before, to improve the financial liquidity situation in the country.

The only sustainable source of this foreign currency is through the export of our value-added, competitive goods and services to the rest of the world. It is therefore important for industry and commerce to be competitive, in view of the stiff competition that exists on the global market.

The implementation of the Industrial Development Policy (IDP) and the National Trade Policy (NTP) for the period 2012 to 2016 is still Work in Progress. These policy blueprints are critical tools that are expected to guide the country’s industrialization process and commercial activities. You may wish to take note that export-led industrialization and export development and promotion, are the key fundamental principles that will drive the IDP and the NTP for the remaining 4 years.

The policies are aimed at transforming Zimbabwe from being a producer and exporter of primary goods into being a producer of processed value-added goods and services for both the domestic and export market. The mission of the National Trade Policy is to facilitate the productive sectors of the economy towards export-orientation and international competitiveness whilst ensuring that Zimbabwean firms and households enjoy continued access to a wide range of high quality goods and services. Measures and strategies will be put in place to increase national exports and promote the diversification of the country’s export basket by harnessing comparative advantage in key priority sectors with the ultimate target being to increase export earnings by at least 10% annually, from US$4.3 billion in 2011 to US$7 billion in 2016.

The theme for this exporters’ conference “Value Chain Business Models- The Key to Export Competitiveness” is well-timed and augurs well with the national policy thrust to improve the Balance of Payments and the promotion of enhanced value-addition of primary commodities in all sectors of the economy in order to restore the manufacturing sector’s contribution to export earnings from the current 16% to 50% by 2016.

Industry and commerce need to adopt and adapt to cutting-edge science and technology solutions to meet the demands of the ever-changing consumer needs and wants. Intense research and development and business-to-business networking is critical in order to allow and improve information sharing and technology transfer. In this regard, I call upon you, the business sector, to redefine your business models and adopt innovation strategies as a way to sustain competition. Companies need to invest in relevant technologies to improve on productivity and quality of goods and services in order to take advantage of export opportunities in the region and beyond.

I would like to assure industry and commerce that Government is aware of the liquidity and supply-side side challenges that industry is facing and will, through the Industrial Development and National Trade Policies, explore all means to access affordable sources of funding to capacitate industry to retool and invest in new and relevant technology.

The Government will also work to enhance trade facilitation in order to expedite trade flows by reducing and/or eliminating barriers to trade.

My concluding message to the business sector is that, due to limited disposable income for domestic consumption and financial liquidity challenges, coupled with limited and costly access to capital, internal demand for goods and services is expected to remain low. It is, therefore, important to access regional and international markets in order to benefit from economies of scale. Revision of business models towards competitive production of higher quality value-added goods and services with an export orientation, is paramount to the sustainable economic growth and development of Zimbabwe.

This is more critical now as markets are opening up thereby increasing competition.
Let me conclude by recognizing the hard work that ZimTrade, as the National Trade Promotion Organization, has been doing to spearhead the development and promotion of Zimbabwe’s exports. Despite facing many operational challenges, the organization has continued to work with the enterprise sector, through the provision of services such as export market research, up-to-date trade information, export marketing training and facilitating the participation of companies at international trade fairs and exhibitions.

At this juncture, it is now my singular honour and privilege to declare the 2013 ZimTrade Exporters’ Conference officially open.

I wish you all fruitful deliberations and every success as we work together in moving Zimbabwe forward.

I THANK YOU!

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