On the Vice President’s call to increase local products on chain supermarkets in Zambia

By Eng Kumbukilani Phiri

On Thursday the 27th May, 2019, we woke up to a news bulletin by Hot FM that the Vice President Inonge Wina has called for more space for Zambian products in supermarkets countrywide.

It was further reported that Mrs. Wina has expressed concern about the current trend where there are more foreign products on shelves in all chain stores than local products.

According to her, this situation has to be reversed to empower local producers and enterprises that thrive on the agriculture and manufacturing value chains but have no market now.

The Vice President further directed the relevant ministries and agencies to make sure that this initiative bears rewards to businesses and the people of Zambia.

In her view this call to action was not however meant to stifle competition in any way but to let the local economy grow through decent and sustainable jobs along the value chain, with the view to uplifting the living standards of rural and urban dwellers.

Mrs. Wina further encouraged Zambian suppliers to adhere to international standards to meet local and international market expectations.

Looking at this call from the Vice President, I am pretty sure many forward thinking Zambians will agree with her. For many years now after the demise of the manufacturing industry in the early 90s, many Zambians have been calling for the resumption of the manufacturing industry to drive our economy and also to be a key driver in the diversification process.

To the young ones, please take note that at some point Zambia used to have a thriving manufacturing base where we produced almost everything for ourselves starting from car assembly, manufacturing of radios, clothing wear, shoes, foods and drinks, most fast-moving goods found in supermarkets, just to mention but a few. The restructuring of the economy to a liberalized one after 1991 ended up killing most of these industries as the country became open to importation of foreign and cheap products. The truth is that most imported products though cheap never matched the quality of what we produced, however, they came in and competed on low price and they won. The result was that our manufacturing industry died and many people lost their jobs. This also created a huge skills gap which will take many years to build up. In the end Zambia ended up depending on copper alone in terms of export which resulted in our country being a net importer of goods and services up to today.

As bad as things may be, there is still hope for Zambia as we now again have a very ripe base to revive our manufacturing industry premised on good infrastructure and an educated and young population. The truth is, we have all realized that over dependence on copper is very unsustainable and therefore the need to quickly diversify to other industries such as agriculture, manufacturing, renewable energies etc.

Some scholars have argued that the local content in mining countries like Zambia is less than 10% since we sell raw materials to industrialized countries where all the processing takes place. Therefore, moving away from mining and supporting local agriculture and manufacturing where the local content is as high as 90% means more benefits to the country in terms of job creation and retention of Forex which we badly need now to cushion the depreciation of our Kwacha. If we already had a thriving manufacturing industry, the depreciation of the Kwacha could have actually helped us increase exports, but that is not the case now because we manufacture and export very little. Therefore, continued depreciation of the Kwacha will only increase our inflation and stifle the economy even further.

Coming back to the Vice Presidents call for chain supermarkets to increase space for local products, we first need to start with the basics. For Zambian Manufacturers to compete effectively on price and quality in the supermarkets, a lot needs to be done to make them competitive. Firstly, government needs to make it easy for Zambian manufacturers to do business by increasing the incentives in the sector such as tax holidays for indigenous companies that invest over $20,000 in manufacturing machinery and employ over 10 Zambians. Zero rate duty on all manufacturing machinery and inputs bought by indigenous Zambians regardless of where they are setting up other than the current situation which requires one to invest over $500,000 and be in a multi facility economic zone (MFEZ). This law only favors foreign investors who may not have long-term commitments to our country. Further, accelerate and increase the creation of business incubation hubs under CEEC in all provinces as is ongoing. Increase cheap financing through CEEC and Development Bank of Zambia for indigenous Zambian startups to encourage innovation and creation of Zambian manufacturing companies. Let indigenous Zambians without collateral use machines bought as collateral to access financing for operations and expansion. Introduce entrepreneurship as a subject in the school curriculum from as early as in primary school at Grade five. Let it be practical oriented where pupils and students will be identifying business gaps in their communities and come up with solutions that will ensure that the problems are not only solved but also make financial gains for them. Once our children are exposed to creative thinking and innovation from grade five to tertiary education, we will have more graduates coming out of school with projects to start that will create employment not just for themselves but others as well.

Once all this is done further consider a law like the 20% subcontracting policy to compel chain stores to stock not less than 40% local products unless they can’t source them locally.

God bless Zambia