Local Manufacturing Sector Contributing Only 15% to the Mining Sector – Chamber
The local manufacturing sector is contributing just 15% to the mining sector. The Chamber of Mines Zimbabwe (CoMZ)’s 2023 State of Mining Industry Survey revealed that out of the US$5.4 billion in revenue generated, approximately US$2.1 billion was spent on suppliers. However, only 15% of that expenditure went to local suppliers, with the bulk directed towards imports.
By Ryan Chigoche
Local manufacturers in Zimbabwe are predominantly small-scale, often characterized by limited resources and capacity. Many of these businesses struggle to compete with larger firms and foreign imports due to outdated technology and machinery. Operating with obsolete equipment not only hampers their efficiency but also affects the quality of their products, making it difficult to meet the standards required by the mining sector.
Additionally, these manufacturers face challenges such as lack of access to financing, which limits their ability to invest in modernization or expand their operations.
Speaking at the Mine Entra 2024 Mine Industry Suppliers Forum this morning, CoMZ CEO Isaac Kwesu acknowledged the various challenges local suppliers face but called on them to offer cost-competitive and quality products.
“I’m fully aware that this meeting comes at a time when our suppliers are facing several challenges, chief among them foreign currency shortages, high cost structures, and competition from imports. This situation has limited the capacity of local suppliers to meet mining companies’ demands. To enhance local content in the mining industry, suppliers should continue to strive to improve the quality of products, as well as cost and delivery lead times, to tap into this huge opportunity,” Kwesu said.
Kwesu added that the Chamber is actively engaging authorities to resolve all the bottlenecks currently affecting suppliers and the mining industry at large.
“We have also taken a deliberate approach to enhance local content in the mining industry,” he stated.
Also speaking at the forum, the Permanent Secretary in the Ministry of Industry and Commerce, Thomas Wushe, emphasized the need for a proper legal framework for the local content strategy to succeed, highlighting the importance of focusing on the mining sector.
“Mining is the leading GDP earner, so we must focus on this important sector, implementing the knowledge that we have as a country. For the local content strategy to be successful and improve from the current 15%, there is a need for a proper legal framework. However, before we implement the policies, local suppliers must also be ready for the amount of work that will be coming their way. Banks must also play their part and support the sector,” Wushe said.
The Chamber recognizes the importance of suppliers in the mining value chain and continues to lead efforts to promote the use of local factors of production.
In this drive, the Chamber has a JSP Committee that spearheads the strengthening of linkages between suppliers and the mining sector. To date, they have achieved key milestones currently being implemented by mining houses through Local Enterprise Development (LED) and supplier development programs.
The committee consists of representatives from manufacturing companies, including the Confederation of Zimbabwe Industries (CZI), Zimbabwe National Chamber of Commerce (ZNCC), and the Bankers Association of Zimbabwe (BAZ), as well as suppliers of other services and procurement executives from mining companies.
The Chamber is also working closely with the government to align mining industry initiatives with the country’s local content strategy through the Local Content Implementation Framework adopted by the government last year.
Additionally, the Chamber has submitted proposals to the Draft Economic Empowerment Bill, which is closely linked to the local content strategy, with proposals focused on local content and community development.
The suppliers forum was held under the theme “Maximizing Contribution to the Mining Industry Through Local Content.
The purpose of the forum was to enhance linkages between mineral producers and the upstream sector, which remains a critical component of the mining industry value chain.