20 November 2012

Zambia: Creation of Industrial Clusters Welcome

THE Small and Medium Scale Enterprises (SMEs) are an important component in any given economic set-up and can spur rapid economic growth if well developed.

This sector plays a vital role in ensuring that it provides a firm foundation for the country's economic development, creation of employment as well as poverty alleviation.

Therefore, the SMEs sector needs to be supported by all stakeholders in order for them to ultimately translate into socio-economic development and enable them to contribute immensely to the country's Gross Domestic Product (GDP).

It is in this light that the Government decided to come up with plans to establish industrial clusters in all the districts to accelerate economic development.

Government should be encouraged to implement this important project which is aimed at stimulating economic growth whose rate is projected at 7.2 per cent per annum.

The announcement by Commerce, Trade and Industry Minister Robert Sichinga that the Government has completed compiling resource mapping data on the creation of industrial clusters exhibits seriousness attached to the venture meant to benefit this country's industrialisation process.

The creation of industrial clusters has come at the right time when Zambia is in a hurry to strengthen its economic base. This will make the country compete favourably with highly industrialised countries.

Industrial clusters have worked very well in other countries such as Ethiopia, which has set up highly mechanised leather projects producing quality products like shoes and other related products.

Government is on the right track as the creation of industrial clusters will definitely help develop capacity at a very high level because the venture is aimed at supporting local SMEs which will identify major products in the given districts for value addition.

For instance, North-Western Province has potential to add value to produce such as pineapples, beans, sweet potatoes and timber that are in abundance in the region.

This is while the Western Province boasts produce such as rice, cashew nuts and can also develop the livestock industry as well as fish farming projects.

As the Zambia Association of Manufacturers (ZAM) has always indicated, the Government should ensure that it provides a clear roadmap on what incentives companies to operate in these clusters will enjoy.

Banks should be brought on board to ensure that they provide affordable long-term loans to SMEs engaged in these clusters.

SMEs urgently need this support from all the stakeholders such as Government and the private sector because most value addition projects are capital intensive whose returns would take long to be realised.

The other issue is the development of various road and communication infrastructure which seem to be among the missing ingredients to the creation of a sustainable rural economy.

This is where part of the US$750 million euro bond should be utilised to ensure that roads or even railway lines leading to these anticipated industrial clusters are well developed in order to attract private sector investments including foreign investors.

This also depends on how flexible local authorities in these districts will be in expediting the allocation of suitable land for the projects whose long-term benefits include creation of massive employment opportunities for rural dwellers which will also lead to poverty alleviation.

It remains to be seen how quickly Parliament will move to approve the Industrial Value Act which will pave the way for the actual creation of industrial clusters.

The project will develop the local SMEs and other private sector participants to a level where the country will be able to compete favourably with foreign products and earn enough foreign exchange through exports.

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