7 December 2011

Zambia: Business Times - Manufacturing Begs for Upturn

ZAMBIA's manufacturing sector has been one of the biggest casualties of the privatistion which started around 1993 following a shift to multi-partism.

Ndola, which was the nerve-centre of Zambia's manufacturing, suffered closure of a number of factories that relocated to other countries. Other promising projects across the country also fell like the Mansa Battery plant which used to make the once famous Spark cells.

Kawambwa tea plantation somewhat got resuscitated but the Mununshi Banana scheme is gone and so has the Chipata bicycle assembly.

Though Zambia's economy had been brought down to its knees at the time, the manufacturing sector was contributing above 33 percent to the Gross domestic Product (GDP).

However as the manufacturing sector was closing up, others were coming up as privatisation proved a better undertaking in certain cases like the beverage area where SABMiller has raised the efficiency of the soft drinks product which was making Tip-Top.

Today, the manufacturing sector adds just about 11 percent to Zambia's GDP and this figure has been stagnant in the last 10 years. While it can be classified as being stable, the worry is that it has not grown well enough.

The Zambia Association of Manufactures (ZAM) agrees the sector has had a stunted growth over the past decade and while complimenting efforts being put into the statistics, it heaps blame on the Zambian consumer.

According to ZAM Chief executive Officer Rosetta Mwape, the Zambian consumers have little faith in the locally produced goods and instead prefer the imported materials.

While ZAM may be complaining about the lack of trust for local goods, the association also needs to agree that some of the products being produced locally are of a lesser quality and with the imported materials just as cheap if ever cheaper, the consumer would go for the foreign goods.

The problem of low levels of standards with Zambian goods among local consumers is one story but issue of Zambian goods being able to compete favourably on the international market is another that brings vexing challenges.

In order to overcome this tough challenge, a number of initiatives have been employed in order to help raise the sales of Zambian products both inside and outside the country.

Locally, nothing comes bigger than the "Proudly Zambian' campaign which tries to encourage Zambians to buy more of local goods than trusting the imported products.

Apart from the Proudly Zambian Campaign which was officially launched last month, there have been some highly exciting programmes like the Enhanced Integrated Framework (EIF), and the Citizens' Economic Empowerment Commission (CEEC) and the National Technological Business Centre (NTBC) Funds among others.

The EIF aims at promoting locally produced goods, raising their standards so that they could meet the requirements of the foreign market as well as raising the capacity levels to satisfy the thirsty foreign markets.

With the EIF headquarters based in Switzerland, Zambian is on the verge of qualifying to be receiving funds by enterprising entrepreneurs with the Ministry of Commerce coordinating the programme locally The CEEC Fund if well managed could help local small and Medium Enterprises (SME) boost their business to overcome start up challenges and also for growth into viable entities.

The NTBC has created a fund which aims to fund locally science based innovations, raise the production capacity and also hit the export market which has benefitted brilliant companies like MwekaTech in Kitwe, dealing in welding rods.

Zambia imports all welding rods.

Mid this year, Zambia hosted the African Growth Opportunity Act (AGOA) confrence which exposed the deficiency in not just Zambia's export levels but also standard of goods making the international market, the United Market especially.

It was noted that goods from Zambian or African products were not being accepted out in the United States with oil dominating the sales between Africa and the USA.

Other complaints were that the US market was closed up through strict standards checks like the sanitary and phytosanitary or SPS measures over the health levels for foodstuffs.

While the complaints were presented to US Secretary of State Hillary Clinton who graced the conference in Lusaka, the need for improved levels of quality remained a high bar, no matter high, but has to be overcome by Zambian manufacturers.

ZAM agrees it is time to raise the bar but remains adamant Zambians need to buy Zambian goods more than they presently are.

Ms Mwape says the stunted growth of the manufacturing sector has been caused by low levels of consumption by Zambian consumers who take local goods to be inferior.

"Consumption of locally produced goods is low and that has resulted in the failure of the manufacturing industry to grow. People must buy Zambian goods not just because they are made in Zambian but because they are good quality," he said.

Ms Mwape also says with increased consumption of locally produced goods, not only would the manufacturing sector grow, but the national economy as well.

She explained that if more local goods got consumed, there would be an increase in the number of industries to meet demand and thereby create more employment for locals.

Together with Government through the Ministry of Commerce started a campaign to make Zambians appreciate Zambian produced materials more than they presently are in the name of the "Proudly Zambian".

Officially handed to the ZAM by Government and officially launched last month, the Proudly Zambian campaign is the first towards making Zambians identify themselves with their own and buy Zambian.

Quite an ingenuous move and ambitious campaign, the Zambian manufacturers would now have to raise their standards and produce goods good enough to compete with goods produced in Zimbabwe, Malawi, Namibia, East Africa and even the mighty South Africa and across the continent.

On the 'Proudly Zambian' campaign a marketing strategy meant to compel Zambians to buy local goods, she said the programme should be used to showcase the fruits of manufacturers' persistent calls for protection and preferential taxing.

"The 'Proudly Zambian' mark should be internationally recognised and one driving competitiveness of Zambian goods. It should be an impetus for economic growth, employment creation, social change and overall prosperity.

"Having lobbied from government for rebates and preferential tax treatment should now bring results through quality goods that should be able to sell and compete with foreign goods," were the words of the ZAM CEO Mwape.

ZAM vice president Eugene Appel has always insisted that Zambia's manufacturing sector was suffering not because of the poor quality goods but simply as a result of the country being flooded with cheap subsidised imported goods.

Mr Appel, a former Commerce deputy Minister blamed the trade protocols that Zambia has accented to as the reason the sector was not growing.

He has thus asked for protection from government against certain imports.

But that would be against the free trade policy under the Common Market for Eastern and Southern Africa (COMESA) and the Southern Africa Development Community (SADC) among others which propagate for tax free imports of goods manufactured with the region.

With South Africa so advanced and able to compete with the most elite worldwide, the free trade protocols only give South Africa an undue advantage.

Explaining the rationale behind the Proudly Zambian Campaign, ZAM states in its concept that the programme is relevant for the manufacturers as it will not only advertise their companies and products but also increase awareness of the consumers on the need to buy locally produced products.

"This will then trigger increased consumption of locally produced products by consumers thereby contributing to the welfare of the country.

"The programme is also relevant for the government, as it will bring out issues affecting the sector as well as impart knowledge in the policy-makers on production processes and the products that the manufacturing sector is producing, quantities and markets that are available," it states.

Furthermore, the programme will help solve quality issues of products being produced locally as most producers will be compelled to certify their products before they can participate in the campaign.

The mark will help consumers identify products that meet minimum standards and therefore reduce on issues of sub standard goods on the market.

This programme is also relevant to SMEs as they will also benefit from reduced cost of certifying products thereby helping them to standardise their products which might result in a more and sustained demand for their products.

So whether it is the consumers or the manufacturers or the economy which will be the winner of this, remains to be seen but the ZAM insists it is meant for the good.

"Overall the campaign will increase Zambia's competitiveness in sectors such as manufacturing especially resulting from increased consumption by the local market as well as increased confidence in Zambian products by the outside market regionally as well as internationally.

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