Foundry retooling and effects of sanctions
In an endeavor to achieve the upper middle-income economy vision by 2030, Zimbabwe has been emphasizing the Metal Casting industry’s retooling, adoption of new technologies and fostering innovation, which is a pillar of industrialization.
The country’s value addition and beneficiation drive focus has been to harness new technologies and drive import substitution, placing the foundry industry at the forefront of the national development agenda. However, economic sanctions on the country seem to have been a stumbling block to the total retooling of the foundry industry.
Are sanctions the reason for the decline of the industry?
According to former Zimbabwe Institute of Foundry (ZIF) President Mr Itai Zaba, sanctions have been a stumbling block in metal foundry retooling.
Zaba also said that the country is also considered high risk due to the lack of trust in governance systems and programs.
“The sanctions are a real stumbling block in lines of credit and international business deals. In my view and experience, the international perception of the country is that of high risk and a lack of trust in our systems and programs,” Zaba said.
Andrew McFarlane said despite sanctions being a major stumbling block to retooling, lack of consistency and clarity on policy has also been a reason for the decline in the sector.
“The sanctions have affected the economy of Zimbabwe in a serious way. The sanctions themselves are not the root of the decline in economic activity of the country,” McFarlane said.
What should the government do to ensure the foundries grow regardless of the sanctions?
The critical need for retooling initiatives emphasizes the importance of forging partnerships with financial institutions to secure funding for sectoral development.
The government should ensure that the sector gets enough funding and that policy provisions are put in place for the sector to survive despite hostile international relations.
According to Zaba, the government should give new players in the foundry industry incentives to operate without a host of policies and taxes affecting their operations.
“The government should set up a revolving fund to support retooling, import substitution, and exports generation by our foundries. At the moment, we are being left alone in financing our way through a very difficult operating environment. I also plead that the government reduces the barriers to entry into the sector by waiving or eliminating some statutory requirements for startups. It would be helpful if we could agree to an incubation period before the stringent requirements currently in place are enforced,” he said.
McFarlane said the government was to ensure that the country’s economy is market-free and that the currency is freely floating and tradable and guarantee other freedoms in the economy for the foundry to thrive.
“The challenge for the government regardless of the sanctions is to attract highly skilled people with high GDP per capita to the country again. This can only be done by guaranteeing various freedoms one finds in free market economies. Low-skilled or low GDP per capita individuals do not drive economic growth and thus won’t cause foundry sector growth,” he said.
What should the foundry sector themselves do to help realize the government’s vision for growth?
The former ZIF President said, “The foundry sector should implement good corporate governance, programs for environmental compliance, quality management systems, and scheduled import substitution and export enhancement programs.”
However, according to McFarlane, there is not much the foundry can do when the government is not laying out a conducive environment for businesses to grow.
“I don’t think the foundry sector can do much as the skills required are high and these are leaving Zimbabwe,” he said.
What did the Rhodesian government do to grow despite having UN sanctions that our current can still do?
According to Zaba, the Rhodesian government was open to ideas from the sectors affected and ensured that they grew in a free-market space. He said there was a continuous engagement between the sector and the government leading to production success.
“They worked closely with the Chamber of Commerce and the industrialists to create home-grown solutions which included import substitution and employment creation. If my research serves me right entities such as RISCOM (now ZISCO) and Rhodesia Railways (now NRZ) picked in performance during the UDI and the pre-independence sanctions period. Let’s have continuous rapport between the government and the foundry sector as well as the general manufacturing sector in order to work together and monitor each other towards Vision 2030.
“International sanctions gave a second boost to industrialization in the 60s and early 70s and these same sanctions forced a liberal free market UDI government to become very interventionist in assistance to the industry,” Zaba said.
McFarlane added on, saying that the Rhodesian government due to their open-door policies attracted skilled individuals who managed to help with ideas for economic growth.
“I think the Rhodesian government attracted these high-skilled individuals and ensured the skills remained in the country. There may be other things despite the poor treatment of black Zimbabweans.