Change agent needed to get out of paralysis

In South Africa, at Mangaung on the sidelines of the ANC’s national elective conference, Trade and Industry minister Rob Davies informed businessmen that he believes their expectations of labour market reforms being a realistic path to making South Africa’s manufacturing sector more competitive is pie-in-the-sky thinking.

Column by Tapiwa Nyandoro

It is not part of the ANC government’s industrial policy. He suggests South Africans pursue competitive advantage through beneficiation of primary products, especially mineral resources the country is endowed with in abundance, and the use of focused developmental finance institutions, as, he noted, Brazil has, and is doing.

President Jacob Zuma, speaking to the 4 500 delegates at the ANC’s conference, declared South Africa’s industrial and trade policies as “active and well resourced”.

But will they create jobs as per earlier resolution of the ANC that called for State-owned enterprises and developmental finance institutions to place job creation at the centre of their mandates? According to some eminent economists, the answer is likely to be no of course, or at least not in the immediate future.

The path chosen though politically palatable is capital, not labour, intensive. Sooner or later the chickens will come back home to roost. There is no escaping low wages if you want to create jobs in low tech, labour-intensive manufacturing sectors such as the clothing and textile industry.

Time, of course, might come to the rescue of South Africa in due course, as the income gap between it and other emerging markets widens due to its leadership’s cold feet and inaction. The belated development may not necessarily be to the ANC’s advantage, unless Zuma and in particular Cyril Ramaphosa and other elected ANC-cum-national leaders from Mangaung, turn out to be “change agents”.

According to Jack Welch, the legendary CEO of GEC, Change-Agent-in-Chief is the tile American presidential aspirants aspire to most.
A good national industrial policy is like a good prophet. You recognise both by the outcome of their predictions or achievement of their goals.

Zimbabwe has one, the Industrial Development Policy (2012 – 2016). It resembles closely its South African counterpart. The policy’s vision is “to transform Zimbabwe from a producer of primary goods into a producer of processed value-added goods for both the domestic and exports markets”. Like the Medium Term Plan (MTP) (2010 – 2015), the Industrial Development Policy (IDP) vision has one fundamental flaw.

It assumes Zimbabwe produces primary raw materials in significant quantities as South Africa, to some extent, does. Secondly, unlike the South African one, it cannot be described as “active and well resourced”. It is in fact inactive due to lack of resources. Then a look at output figures in both the MTP and IDP documents show that Zimbabwe hardly produces the primary products supposedly to be beneficiated further.

With enough reserves to export over 60 million tonnes of coal per year, as Mozambique is hoping to do soon, Zimbabwe only produces around two million tonnes of coal per year, hardly enough for Hwange Power Station if it were running at full-installed capacity. And were we to produce coal for export like a serious country, logistics would be the next bottleneck. The installed capacity for the National Railways of Zimbabwe (NRZ), as per the MTP document is a mere 18 million tonnes.

The same position, of unexploited potential, repeats itself in the agriculture sector. From maize to beef, Zimbabwe’s production has virtually crumbled.

Soyabeans and maize are key raw materials for the manufacturing industry and for the livestock industry, but national output is minuscule for both crops.

The Industrial Development Policy notes the need to refurbish and upgrade infrastructure, without clearly stating the need for urgent investment in railroads and power generation in particular.

Unsurprisingly 2012, has come to an end with its targets missed. A review is urgently needed after which it should be rewritten with a focus on:
Investor friendly legal and regulatory landscape
Key State enterprises such as NRZ and Zesa
Agriculture output and productivity enhancement
Iron ore and coal production
Capacity enhancement of regional ports and railways.
Mobilising cheap finance for the above, such as through a banking union with South Africa.
As for South Africa, the next presidential elections should usher in a Change-Agent-in-Chief willing to drive the nation out of the current policy paralysis.

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