Govt targets 7 sectors for import substitution

Business Reporter

In a bid to reduce reliance on imports and boost local industry, Zimbabwe has identified seven key sectors for import substitution.

The country’s short-term manufacturing blueprint, the Zimbabwe Industrial Reconstruction and Growth Plan (ZIRGP) outlines a series of interventions to promote industrial growth, including measures to enhance intermediate manufacturing, optimise value chains and increase local content.

The plan runs from October 2024 to December 2025.

Despite the potential of the local manufacturing sector, Zimbabwe continues to spend significant scarce foreign currency on imports.

To address this issue, the Government has prioritised seven sectors for import substitution namely tyres, motor vehicles, fertilisers, pharmaceutical products, articles of iron and steel, cement and edible crude oil.

Since 2018, the country has spent several billions of US dollars on these products.

One of the most critical sectors identified for import substitution is fertilisers. With annual demand estimated at 780 000 tonnes and only 30 percent capacity utilisation, Zimbabwe imports fertilisers at a cost of approximately US$333 million per year.

The Government believes there is significant potential to produce fertilisers locally, using available resources.

This would not only reduce import costs but also have a positive impact on the agricultural and manufacturing sectors.

To support the local fertiliser industry, the Government plans to implement several measures, including timely payments to local manufacturers and suppliers, reliable access to foreign currency and investment in a new fertiliser plant.

These interventions are expected to increase fertiliser industry capacity from 30 percent to 45 percent, thereby decreasing reliance on imports by 50 percent.

In the pharmaceutical sector, Zimbabwe’s manufacturing capacity is currently operating at 50 percent, producing only 300 out of a potential 1 500 product lines.The country’s import bill for pharmaceutical products has averaged US$250 million over the past six years.

To address this, the Government plans to increase public procurement of locally produced medicines, reduce product registration timelines and provide funding for infrastructure development and research.

The steel sector also presents an opportunity for import substitution.

The recent commencement of steel production at Dinson Iron and Steel Company (DISCO) has the potential to save the country up to US$500 million worth of imports annually.

The Government will focus on promoting linkages between DISCO and upstream and downstream industries to maximise the benefits of this development. Other sectors targeted for import substitution include motor vehicles, tyres, edible oils and cement.

The Government plans to implement various measures to support local production in these areas, such as repealing certain regulations, providing incentives for local assembly, and investing in infrastructure.

By successfully implementing these import substitution strategies, Zimbabwe aims to reduce its dependence on foreign imports, create jobs and strengthen its domestic economy.

In addition to its efforts to revitalise existing industries, ZIRGP also prioritises the utilisation of idle manufacturing infrastructure and the implementation of a local content strategy.

Throughout the country, there is a significant amount of unused manufacturing infrastructure, including empty factory shells and outdated railway infrastructure.

The ZIRGP aims to address this by taking stock of such assets and making them available to SMEs, potential investors, and businesses in need of operating space.

Government institutions such as the National Social Security Authority (NSSA) and the National Railways of Zimbabwe (NRZ) will be engaged to explore ways to convert their idle assets into productive economic resources.

The ZIRGP also emphasises the importance of local content.

In collaboration with Buy Zimbabwe and other stakeholders, the government is implementing strategies to enhance local content in procurement and consumption.

A deliberate policy to direct Government departments and agencies to buy Zimbabwean products has the potential to stimulate local demand, create jobs, and foster the growth of domestic industries.

The ZIRGP will foster and facilitate linkages between the agriculture, mining, tourism, energy, and Macro, Small to Medium Enterprises sectors through backward and forward linkages.

The Government and private sector representatives will meet to discuss value chain linkages in these sectors.Rural industrialisation is a key component of the plan and requires a coordinated Government approach for its successful implementation.

Rural industrialisation is vital for creating jobs, driving economic growth, and reducing poverty.

The drive for rural industrialisation will be coordinated by Ministers of State for Provincial Affairs and Devolution in each province, with line ministries providing technical and other support.

Industry and Commerce Minister Mangaliso Ndlovu believes the industrial and commercial sectors have the potential to drive Zimbabwe’s economic growth and development.

He emphasised the importance of Government intervention through a sound industrialisation strategy to create a favourable operating environment for businesses and facilitate structural transformation towards economic growth, development, and job creation.

“Despite facing numerous challenges, the industrial and commercial sectors have the potential to regain their position as the primary driver of economic growth and development.

“This is especially true considering its strong connections with other key sectors such as agriculture, mining and services,” said Minister Ndlovu in the foreword.

“Government intervention through a sound industrialisation strategy is crucial to facilitate structural transformation towards economic growth, development and job creation.

To achieve this envisioned structural economic transformation, the Government is committed to creating a favourable operating environment for businesses to thrive.