Zimbabwe should implement strategies to deepen its value chains to localise key manufacturing inputs and eliminate dependency on imports to improve its competitiveness in global markets, economic experts say.
This comes as captains of industry and commerce continue to lobby for a review of the ease of doing business conditions to facilitate growth of business and the economy in general.
Economist Dr Cornelius Dube, who is also Confederation of Zimbabwe Industries (CZI) chief economist, said Zimbabwe was importing more than 52 percent of key raw materials needed for manufacturing.
In other key sectors such as pharmaceuticals, the ratio of imported raw materials can be as high as 87 percent, which raises the cost of production and diminishes the companies' and country's competitiveness.
Dr Dube also highlighted that the local industry was lagging in terms of capacity to export manufactured goods due to the high costs of production.
Zimbabwe's productive capacity suffered extensively over nearly two decades since the turn of the millenium, largely buckling under the weight of Western sanctions, which decimated agriculture and industry productivity.
"Our capacity to produce and export manufactured goods is where we are basically failing to be competitive even when compared to countries like Namibia.
"One of the reasons is that about 52 percent of the raw materials (87 percent for the pharmaceutical industry) that are used in the manufacturing industry are imported and that is diminishing our competitiveness.
"So, in terms of industrialisation we should be focussing on the extent to which we can ensure that we deepen our value chains and try to localise them so that at least we depend on the raw materials that we can produce on our own.
"Especially leveraging on our abundant mineral resources, on our efficiencies in mining as well as in the agricultural sector where we are doing quite well," said Mr Dube.
This comes as captains of industry have been lobbying the Government to implement policies that improve the ease and cost of doing business to enhance the competitiveness of local products.
They cited the need to streamline procedures for starting a business, dealing with construction permits and registering property, among other areas. Simplifying regulatory procedures and the cost of complying with regulations can improve the business and economic environment in Zimbabwe lobbyists say.
Addressing the high cost of transportation, multiple taxes, exchange rate volatility, growing informalisation, restrictive policies and energy supply bottlenecks were also cited as factors weighing down business operations.
This comes hot on the heels of President Mnangagwa's clarion call for statutory entities to ensure that fees, licences, permits and regulations promote economic development.
Government is actively working to enhance the ease of doing business, which includes reforming the Zimbabwe Investment Development Agency and a one-stop shop investment processing entity.
Addressing delegates at the inaugural annual competitiveness summit hosted by the National Competitiveness Commission (NCC), Zimbabwe National Chamber of Commerce chief executive officer Mr Christopher Mugaga said currency volatility had been one of the biggest problems compromising the competitiveness of local businesses.
"I always talk to the central bank Governor to say, the moment we just respect market forces, 75 percent of our problems will be solved. All the voluminous chapters on fiscal policy and monetary policy will be irrelevant because at the heart of our competitiveness issues lies the exchange rate confusion.
"It is a conundrum. So, try to clean the exchange rate problem and you will be shocked.
There was a debate recently where people said, look at taxation levels, these are some of the things that need to be sorted," said Mr Mugaga.
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Through the Reserve Bank of Zimbabwe's monetary policy and Treasury's tight fiscal policy measures, the Government has made giant strides towards eliminating exchange rate issues. President Mnangagwa is on record saying his administration is fully aware of the challenges facing businesses and is actively working to create a more supportive environment that fosters innovation and investment.
This entails implementing measures that promote value addition and beneficiation of raw materials and minerals, which are essential for developing robust industrial value chains.
He has also highlighted that the NCC was a key institution tasked with interrogating the various aspects of the country's economy, to enhance local and global competitiveness.
Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube is also on record saying that the Government is committed to localising all value chains to enhance the diversity and complexity of Zimbabwe's manufacturing sector.
