Govt Urges Industry to Collaborate and Implement Local Content Strategy
The Government of Zimbabwe has called on stakeholders within the mining sector to collaborate and strengthen the value chain by implementing the local content strategy, Mining Zimbabwe can report.
By Ryan Chigoche
Currently, the local manufacturing sector contributes just 15% to the mining industry, with approximately US$2.1 billion of the US$5.4 billion in revenue generated being spent on imports, indicating a troubling reliance on foreign products and minimal local procurement.
In June 2019, the Government of Zimbabwe approved the Local Content Strategy (LCS) to promote the utilization of domestic resources across various value chains. This strategy aims to create a supportive ecosystem within industries, aligning with the vision of transforming Zimbabwe into a highly industrialized economy. Key objectives of the LCS include increasing average local content levels in prioritized sectors from approximately 25% to 80% by 2023, raising capacity utilization from around 45% to 75%, and boosting manufactured exports in these sectors by at least 5% annually between 2019 and 2023. However, these objectives have yet to be fully realized, as the mining sector continues to heavily rely on imports, underscoring the need for more effective implementation of the local content policy.
Addressing industry suppliers recently, Thomas Wushe, Permanent Secretary in the Ministry of Industry and Commerce, emphasized the necessity of collaboration to ensure the success of the local content policy. Local manufacturers in Zimbabwe are predominantly small-scale and often face challenges due to limited resources and outdated equipment. This not only hampers efficiency but also affects product quality, making it difficult to meet the mining sector’s standards.
“I urge each one of you—government officials, industry leaders, and community representatives—to collaborate toward realizing this vision of enhanced local content in Zimbabwe’s mining sector. Together, we can ensure that our rich mineral resources contribute not only to national wealth but also uplift every citizen from different angles,” Wushe stated.
He further added, “To enhance local procurement in Zimbabwe, we propose the following: establish a local content rating system for tenders, enforce a mandate that at least 60% of government procurement comes from local manufacturers while limiting imports to non-locally produced items, institutionalize the Buy Zimbabwe Programme, harmonize standards and specifications to promote the procurement of locally available goods, and engage with the Procurement Regulatory Authority of Zimbabwe to refine tender modalities and revisit the definition of a local producer. Together, these measures will support local industries and foster economic resilience.”
Mining is a core sector of the Zimbabwean formal economy, significantly contributing to GDP, employment, and export receipts. Both the African Union’s Mining Vision (AMV) and the Southern African Development Community’s (SADC) Regional Mining Vision (RMV) emphasize the importance of enhancing mineral extraction and processing linkages, particularly in the mining supply chain, through increased local content.
Success stories of local content policies from countries like Angola, South Africa, Zambia, Tanzania, Nigeria, and Brazil highlight the potential benefits. South Africa, for example, identifies local content as a strategic industrial policy instrument to reduce the trade deficit, foster emerging industries, and increase the tax base. The South Africa Mining Charter of 2019 stipulates that a minimum of 70% (by value) of mining goods must be manufactured or assembled in the country, requiring at least 60% local content during manufacture or assembly, and 80% of services required by holders.
To bolster local procurement and foster economic development in Zimbabwe, several key initiatives can be implemented. One primary strategy is to prioritize preferential local procurement. By favoring local suppliers in government contracts, this initiative aims to boost local economies and ensure financial resources circulate within communities.
Another essential component is funding to capacitate local suppliers. Allocating financial resources to enhance their capabilities will enable these suppliers to meet public procurement demands effectively. This approach will improve the quality of goods and services while creating numerous business opportunities for local firms, fostering a competitive and innovative marketplace.
Inclusivity is also critical. By creating opportunities specifically for women, youths, and people with disabilities, the framework promotes broader economic participation, leading to significant advancements in entrepreneurship and contributing to a more equitable economic landscape.
Capacity building and employment creation are vital aspects of these efforts. Investing in training programs will enhance the skills of the local workforce, preparing them for the demands of modern industries, strengthening local businesses, and creating jobs.
The transfer of technology is another important facet. Encouraging technology transfer to local firms can improve efficiency, productivity, and competitiveness. Coupled with a strong emphasis on research and development (R&D), this will drive innovation, leading to the development of new products and services tailored to local needs.
Fiscal support plays a crucial role in this framework as well. By providing fiscal incentives and support to local businesses, the government can help them thrive in a competitive environment. This support, along with local production and consumption awareness programs, will raise community awareness about the benefits of supporting local businesses, encouraging greater investment in local economies.