HARARE - Deputy Prime Minister Arthur Mutambara says Zimbabwe should embrace protectionism to facilitate revival of the country’s ailing industry.

“In order to effectively pursue value addition, Zimbabweans must initially adopt a value system that embraces smart and innovative protectionism,” he said.

Zimbabwe’s industry — currently operating at 44 percent capacity utilisation — has been facing several challenges, particularly limited access to capital or long-term credit lines and failure to retool.

The influx of cheaper imports, mainly Chinese, has also compounded the situation for the local industry still suffering from a hangover from a decade-long economic crisis.

According to latest statistics from Treasury, Zimbabwe’s trade deficit has burgeoned to over $1 billion raising fears that the country is accelerating its de-industrialisation and requires urgent action.

However, despite empirical evidence revealing that protectionism causes inefficiencies in the economy and can be a form of tax on consumers Mutambara argued that “contrary to conventional wisdom, protectionism is not necessarily without merit.”

“…as long as there are strategic plans, timelines with key milestones, and an exit strategy; the protection and incubation of chosen industries has efficacy,” he added.
Mutambara said what is critical is nurturing the manufacturing sector for a limited and defined time frame.

“When they (manufacturing industries) are matured and can openly compete, they can then be unleashed unto the global market, without any further handholding.

“This is structured and smart protectionism, not blanket protectionism which is clearly unsustainable. In fact most of the countries that have industrialised, have engaged such clever protectionism,” said Mutambara.

This comes as the Confederation of Zimbabwe (CZI) president Kumbirai Katsande has said it is time government responded swiftly to protect industry.

“We are not asking for wholesome protection. These are not very large percentages of protection we are calling for. Ask the developed countries such as the US, Japan and the UK how they developed theirs,” said Katsande.

CZI — an industry representative body — says the country is spending billions of dollars on imports yet it is not realising much from its exports.

According to the Industry and Commerce ministry, Zimbabwe’s industry requires an estimated $2,5 billion to recapitalise, but government has no capacity to provide such funds.

Government has set aside funding under the Distressed Industries and Marginalised Areas Fund and Zimbabwe Economic and Trade Revival Fund, but analysts argue the funds are way too low and would be mostly suitable for existing ventures. - John Kachembere