Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Eric Bloch Column: Unprofitable value addition policies

Eric Bloch Column: Unprofitable value addition policies

Thursday, 12 January 2012 16:22

ONE of the many deficiencies or inadequacies of the Zimbabwean economy is 
the magnitude of value addition opportunities to the country’s diverse 
primary products, that have either never been pursued or, if at all 
undertaken, has only been so to a minuscule extent.  A few of the many 
examples of the failure to effect extensive primary product enhancement 

Approximately 80% of Zimbabwean cotton is subjected only to ginning before 
being exported; 10%is exported as yarn; 5% as fabric and hence only 5% is 
converted into finished products such as garments, sewing threads, and other 
end-of-the-line products;

At least two-thirds of Zimbabwean timber is disposed of in plank condition, 
instead of being converted to furniture, doors, flooring or other end 

Platinum is exported in its mined, wholly unprocessed state, as also is the 
case (until recent legislation halted it) in respect of chrome, and 
similarly, most of Zimbabwe’s comprehensive range of minerals;

A very high proportion of Zimbabwe’s tobacco, and of numerous other 
agricultural products, is also exported either in raw state or subjected to 
only a minimum of processing and enhancement.

In consequence, export earnings are minimised instead of being beneficiated 
as a result of the value-addition that could readily have been effected 
prior to export.  Concurrently, as some of the exported primary products are 
required, after appropriate value-addition, by Zimbabwean manufacturers or 
consumers, Zimbabwe has to fund more imports than would otherwise be 
required. In addition, in respect of many of the primary goods exported, a 
high proportion of transportation costs is attributable to the waste which 
exists whilst the products are in their primary state, impacting negatively 
upon the earnings of the product producers.

As a major contrast to these adverse consequences of primary products being 
exported without prior value addition, resorting to appropriate 
manufacturing enhancement within Zimbabwe of such products not only obviates 
them being subjected to those costly disadvantages but, in addition, some 
very major additional benefits accrue from doing so, inclusive of:

Enhancement of export values and, therefore, of trade balance inflows into 

A few existing enterprises, either already engaged in some limited value 
addition to primary products, or able to diversify into so doing, would have 
expanded operations, not only enhancing their viability, but also employing 
more Zimbabweans, thereby helping to some extent (even if relatively 
minimal) to counter the prevailing mass unemployment.  Concurrently, value 
addition opportunities would stimulate development of new enterprises, also 
yielding employment opportunities, and significant downstream economic 

Costs for local manufacturers who depend upon imports of value-added 
products of a like nature to those which would be available to them if 
Zimbabwe effected value-addition would diminish, thereby partially enhancing 
the viability of their operations and partially rendering their finished 
products more price-competitive in export markets and available at lesser 
cost to domestic consumers;

As a result of enhanced profit performance of existing and new enterprises, 
there will be
significantly improved revenue flows within the economy in general and to 
the fiscus in particular, the enhanced fiscal inflows emanating from a 
combination of direct and indirect taxation.

It is very commendable that government, which is generally myopic to 
Zimbabwe’s essential needs and how to address them, has recognised the 
critical need for Zimbabwe to maximise value-addition opportunities, and to 
reap the many benefits that would accrue therefrom, albeit that in common 
with the state’s usual inability to recognise necessities timeously, it has 
done so very belatedly. Some commendation is due for it having finally 
recognised the reality of the desirability and need to motivate 
value-addition to Zimbabwe’s primary products.

However, as is almost always, very regrettably and counter-productively the 
case, government has yet again sought to address a key issue (which 
value-addition motivation unarguably is) by adopting a draconian, 
overly-dictatorial, and counterproductive strategy.  Some months ago, 
without any meaningful prior consultation, it imposed an absolute ban upon 
the export of unprocessed chrome.  In making that bar to exports, government 
cavalierly disregarded that the enterprises in Zimbabwe engaged in the 
processing of chrome had very limited production capacity and hence could 
not acquire any more volumes of chrome than they had had been doing prior to 
the export ban.

The result was disastrous for chrome producers, almost all of whom lacked 
the capital resources to stockpile their mined chrome and therefore had to 
discontinue operations, with concomitant dismissal of employees, loss of 
contribution to the downstream economy, reduced foreign currency inflows, 
and diminution in the direct and indirect inflows to the fiscus.

Unable to learn from its errors, as Government has irrefutably proven over 
many years, it has now declared the intent to bar exports of unprocessed 
platinum, which is foremost in Zimbabwe’s mineral exports.  This will 
undoubtedly have like disastrous consequences as those sustained by the 
chrome mining sector.

Instead, government should determinedly resolve to recognise and acknowledge 
its errors of judgment, and consequential misguided and counterproductive 
policies and legislation, and alternatively should address how the creation 
of domestic value-addition resources can best be achieved, and then should 
vigorously and intensively pursue such constructive measures.  Thereby, 
government would beneficiate the economy, and hence Zimbabwe’s people, 
instead of effectively hastening the worsening of the economy.

Amongst others, such measures must include the creation of a conducive 
investment environment (including, where necessary, modification of the 
Indigenisation and Empowerment legislation, respect for and compliance with 
Bilateral Investment Promotion and Protection Agreements  and enhancing 
access to capital resources, concurrently with credible assurances of 
minimised state interventions in operations, be those interventions direct 
or indirect).

At the same time, comprehensive, inclusive, incentives should be established 
to motivate the development of value-addition processes, be they in respect 
of Zimbabwean minerals production, that of agriculture, or other products. 
Incentivisation, motivation, and facilitation, are far more effective than 
seeking to attain objectives by domination and by harsh, counterproductive, 


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