HomeOpinion & AnalysisColumnistsStrengthening local production, sure way of indigenising local economy

Strengthening local production, sure way of indigenising local economy


Some years back when we were young, it was prohibited to accept food from a neighbour no matter how hungry one was.

I suppose it is still common practice even today. Our mothers those years warned us that this was to protect us from eating poisoned food.

And as young children we feared death though we always wondered how the same food would not kill the neighbour’s children. But of course, once in a while there would be private bilateral exchange of food among friends and such transaction would remain a closely guarded secret.

As we grew older, we later learnt that, apparently eating at your neighbour’s place without our parents’ consent had little to do with the fear for food poisoning, but it was viewed as an embarrassment to the family. It compromised family integrity and reputation.

No matter how difficult life could be, no parent would want to be seen as unable to feed his or her children. And the breach of that family rule was a punishable offence which attracted a good hiding or withdrawal of privileges. Surprisingly this rule did not apply to adults.

I was reminded of these childhood experiences during my recent visit to Harare. As I landed in the sunshine city I was aware that indigenisation was a topical issue. I was quite aware of Youth Development,

Indigenisation and Empowerment ministry push for economic indigenisation. I have written several times questioning the rationale of our approach in implementing, but not necessarily opposing the idea.

In my contribution to the indigenisation debate, I didn’t just question the policy, but I went further to suggest that it was maybe a waste of time, resources and not strategic to push for a 51% ownership if we can not arrest our income leakages. I argued that, while I acknowledge the importance of indigenising an economy, economic growth was not propelled by change of ownership, but by creating new entrepreneurship that is built around the existing ones.

The economy grows when a country can retain its earnings within its borders to spruce up production, unlike the current situation where the market is saturated by imports.

For anyone in leadership position, it should be worrying that everything around you has a “Made in China” tag. That is what would attract punishment from our mothers.

What I saw in Harare is a growing and vibrant young entrepreneurship that is fast replacing the old business ventures. I wondered if the indigenisation policy was of any relevance in any economy that seems dominated by locals, at least in the retail sector. And if by indigenisation the government means local ownership and entrepreneurship, and then results on the ground tell a curiously positive story.

We surely do not have a shortage in that area. But what remains to be seen is whether this is the local ownership that will sustain the future economic development of Zimbabwe.

The proliferation of this new entrepreneurship is sign of potential and good business acumen which needs to be redirected by the government policy towards sustainable ends.

The current state of affairs shows a huge concentration in retail activity which is heavily dependent on imports from Asia.

The first challenge with this approach is that it turns the country into a consumer of imported products thereby stifling resuscitation of local production industry thereby undermining sustainable growth. The second challenge is that money treads back to those who own the means of production.

This therefore means that the earnings which were supposed to be saved in locally-owned banks, invested in new business ideas and circulated in our economy are actually flowing back to China, thereby contributing to the growth of that country.

Thirdly, it is makes it hard to grow our economy when a country becomes a supplier of raw materials and a consumer of finished products.

A country tends to pay more for finished products than it earns from the sell of its raw materials.

For an African country like Zimbabwe, it is not sustainable to build an economy around the sale of raw of materials and consumption of imports. The gap between the two – production — is the cog that drives economic growth.

This therefore suggest that instead of the current take-over of the few foreign-owned banks, there is need to recapitalise our production sector and then localise our consumption to ensure that local income stays in the country.

Otherwise just localising ownership of banks does not necessarily translate into localising the flow of capital if national consumption is import-based.

This has the advantage of improving beneficiation which increases the proportion of the value derived from the exploitation of raw materials which remains in-country and benefits local people by creating employment opportunities in addition to cutting the retail price of goods.
For example, in the cotton industry, the beneficiation imperative argues that ginning and spinning processes within the cotton value chain should be conducted in-country to maximise the local economic contribution.

China’s economic growth was not a result of take-overs, but instead localisation of the production industry building on foreign companies that fell for the lure of cheap labour. This witnessed the strengthening of their local production industry which aroused a huge consumption appetite.

This is among the few factors that have made China the biggest buyer of African resources in recent years.

This also explains why unemployment has been going up in Europe and America after they lost their production industry to China.

.Tapiwa Gomo is a development consultant based in Pretoria, South Africa.

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