Listening to the Reserve Bank of Zimbabwe (RBZ) top brass reminisce about lost monetary policy due to the lack of a local currency, Confederation of Zimbabwe Industry membership crying for protective tariff barriers and going over the Medium Term Plan goals that look backwards, one cannot help but detect an overwhelming nostalgic theme.
Comment by Tapiwa Nyandoro
The feeling is if only we could go back to 1999, everything would be fine. We have become the past, yesterday’s people, devoid of new ideas and strategies.
Wistfully we remember a by-gone era now appearing even more beautiful in history texts.
During the lost years the world has changed. What was a competitive industrial sector if reproduced today will only be a museum piece. Each year other economies have been ratcheting up productivity gains in the use and application of capital, technology and labour, while the local economy has been on the back pedal.
The diamond industry, if the claims made by Zimbabwe Mining Development Corporation (ZMDC) top brass at the recent diamond indaba in Victoria Falls can be taken as reliable, may be in a different league.
It is export focused. Its technology is said to be the latest. Its reserves, which have to be proven, project Zimbabwe having a world leading 25% share of the world market of rough diamonds in due course. We are even told that 60 000 jobs have already been created in India as a result of our rough diamonds.
The Mines ministry says the national goal is to raise returns and create jobs by cutting and polishing as many of our rough diamonds as we can locally. To attain this vision, ZMDC needs to copy the actions of global companies and craft its strategies accordingly.
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To begin with, it would help if its board acquires the right skill set and raises the bar on corporate governance.
Then I suggest with the blessing of the Mines and Industry ministries, ZMDC should commission a reputable employment agency, after suitable due diligence, to recruit a core of experienced Indians from the diamond industry, retired or otherwise, to provide the necessary technology transfer as we establish our own diamond cutting and polishing industry.
The Registrar-General must be on standby ready with work permits for the core group. Zimbabwean work permits are valued highly in India.
This exercise, therefore, should be a piece of cake. That is, of course, if all the hype on the Marange resources, especially as regards reserves, is true.
The strategy suggested above, is not unusual in playing an industrial catch up game. The Korean motor industry adopted it with Kia Motors famously recruiting an Audi automobile designer to boost its design studios.
Huge State- owned Chinese companies are also on the prowl buying Western companies to acquire technology.
And one can only drool at the “4 by 4 by far” technology India’s Tata acquired when it bought Jaguar Land Rover from Ford Motor Corporation.
The United States outdoes everyone by facilitating the immigration of PhD holders to its fair shores. Its competitive advantage is innovation, hence its policy of encouraging intellect to move stateside to its huge array of publicly funded research laboratories and research focused universities.
Our national industrial policy should draw lessons from the above. If we are the leading producer of rough diamonds, then let us be in the top three among the producers of the finished product, more so as it seems this is not a capital intensive operation, but skills and labour intensive one.
The same should apply to tobacco, even if it means setting up off shore manufacturing plants to get around tariff barriers. Our industrial policy ought to encourage the shift from a multitude of sub economic production facilities producing everything, thus making the nation a Jack of all trades and master of none, to a few world-class entities.
This must be a deliberate policy to be pursued where a competitive advantage is at hand.
Diamonds, if the extent of the reserves is to be believed, platinum group metals, iron ore, coal and agriculture products are areas where competitive advantages can be harnessed to produce reasonably sized companies by global standards.
The nation needs, however, to be aware of the risks associated with depending on non-renewable resources such as diamonds and other minerals. One such risk is price volatility, and the low prices we are taking could simply be due to the global financial crisis rather than sanctions.
It could also be the product of our boundless enthusiasm in piling them high, with the result that the global price goes down. High prices on the other hand, encourage money to flow into prospecting ventures globally leading to new mine discoveries.
The big worry though is the potential corrosive effect of non-agricultural commodity production on political institutions. Not long ago, the Prime Minister of the land and parliamentarians were not welcome in Chiadzwa. It had become a state within a State.
To minimise the corruption, or the perception of it surrounding the resource extraction in Marange, ZMDC and indeed the mining sector as a whole, especially those companies with a turnover of $30 million and above, must be compelled to list on the Zimbabwe Stock Exchange (ZSE) and if need be seek a secondary listing in other Sadc bourses.
This encourages transparency and provides an exit route for ZMDC so as to use proceeds from initial public offerings to further develop the mining industry thus helping in the creation of more jobs and new wealth.
The operative word in ZMDC, and indeed Industrial Development Corporation is development. The State-owned organisation should be reminded now and again of this core mandate lest it finds a comfort zone in routine operations.
Finally, diplomacy is a tool that we can use to our advantage on the sanctions issue. It is well within our collective competencies to hold free and fair elections.
The few that seem to benefit from chaotic elections must be told that their actions amount to soft crimes against humanity. All it may take is a good lawyer to prove it.
A diplomatic way to sidestep sanctions is for ZMDC and Zimbabwe Defence Industries to offload their shareholding in the diamond sector to NSSA once the diamond mining companies are listed on the ZSE. NSSA, I believe is not on the sanctions list?
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