HARARE – Exploiting value chains in the manufacturing sector can help the country make progress in opening new companies and growing existing ones as well as saving millions through cutting on unnecessary imports, a cabinet Minister said on Thursday.
A value chain is a set of activities that a firm operating in a specific industry performs in order to deliver a product or service for the market.
Value chains assist companies exploit synergies and linkages within the production system starting from where raw materials are gathered to production and delivery of the final product.
Industry and Commerce Minister, Mangaliso Ndlovu told Members of Parliament and captains of industry at a workshop on value chain development that the government was, in the initial stages, focusing on value chains with high employment and export potential as well as comparative and competitive advantage.
“The ultimate goal is to maximize value creation as well as minimizing costs. To be globally competitive we look at the things we can do best or much better than others,” he said.
“Value chain development is a key driver for industrialization and necessary for the attainment of an upper-middle class economy by 2030.”
Ndlovu said focus was currently on exploiting value chains in the leather, pharmaceuticals, cotton to clothing industries.
He said a study had shown that the country could save millions through import substitution as billions were being spent annually importing goods that could be made locally.
“For every litre of milk that is imported it costs 85 cents, and if the same is produced locally it costs 25 cents,” he said.
“On average there is a cost saving of 40 cents on every $1 spent on importing packaging material.”
The government, Ndlovu said, was keen to play its part in creating an environment for industry to flourish through exploiting value chains, stressing it was up to the private sector to push for implementation.
Ndlovu however noted that among others, the high costs of doing business, depressed local demand, competition from cheap imports and foreign currency shortages were among major hindrances to exploiting value chains – New Ziana