Thursday, November 01, 2012

Local products

Local products
By The Post
Thu 01 Nov. 2012, 12:00 CAT

The other day the Vice-President of our Republic, Dr Guy Scott, was urging Zambians to begin appreciating local products and have confidence in themselves if the country's manufacturing industry was to grow.

Guy says it's worrying that most Zambians treat locally-made products as rubbish, preferring imported products because they think that products coming from outside the country are better; anything made in South Africa is better than something manufactured here. And he urged Zambians to begin to break that complex and start being proud of their own products.

But there is a history to all this. There are reasons for all this. This reminds us of the comments Yoweri Museveni made in the late 1980s when he was invited by Dr Kenneth Kaunda to come and officiate at one of our trade fairs.

Museveni found that Zambia was producing its own soft drinks - Quench, Tip-Top. And when Museveni asked Dr Kaunda why this was so, he was told that the country had very limited foreign exchange to give the Coca-Cola company for the importation of concentrates. The local soft drinks needed no foreign exchange for importation of anything.

Museveni responded: "You are right. After all, what is Coca-Cola? It's just a mixture of carbon dioxide and water!"

After the political changes of 1991 that brought the MMD into power, the shortage of Coca-Cola was made a political issue. Frederick Chiluba used to boast about the bringing back of Coca-Cola in abundance as one of the achievements of his government.

And he never talked about the loss of Quench, Tip-Top and other drinks that were created by the Zambian people but disappeared under his regime. Chiluba as president was more proud of having Coca-Cola in shops than Quench or Tip-Top, the soft drinks that were created by our own people from local materials. Chiluba preferred Coca-Cola, whose chemical formula he didn't even know, to the soft drinks made by our people from local fruits such as guavas, pineapples and oranges.

From this arises the question: what can we do to encourage Zambians to appreciate their local products as demanded by Guy? One is value re-orientation. We need to change the Chiluba mentality of thinking everything foreign, everything imported was better than local products.
Whereas Dr Kaunda used to wear suits made locally by Serios in Luanshya, Chiluba was wearing designer suits made in Europe and other clothes from very expensive European boutiques.

And during Chiluba's presidency, a lot of foodstuffs, including chickens, at State House were said to be imported from South Africa.

We certainly need to appreciate what we have. As you have read or heard, all that Dr Kaunda ate at State House was locally-produced. Later things changed, the leadership changed its food taste from locally-produced foods to imported ones.

Even most of the furniture that was at State House under Dr Kaunda was locally-produced. Later on things changed; everything at State House was imported.

This is not an over-statement, it is a reality. And if Dr Kaunda, as president, could in spite of all the opportunities and privileges that were around him decide to eat what was locally-produced, that sent a signal to everyone in the country that we needed to appreciate what we had, what we ourselves produced. Starting from there, in our homes and in our offices, we started to use and consume what we had, what we ourselves produced. And by doing so we began to create a lot of jobs, reduced the amount of money that went into foreign exchange needlessly.

There is something to learn from that. And if we follow what Guy is preaching, we will be able to build our economy better. So we think value orientation is very important in this case. We used to consume our locally-made products and they did us no harm. What would be wrong going back to that as far as possible?
But the story doesn't end here. A lot of things have changed in the way we manage our economy. The way we manage our economy, the policies we are pursuing don't encourage local production and as such consumption of locally-produced goods.

The economic liberalisation policies we have been pursuing since the early 1990s do not encourage local manufacturing. Of course, when we first embarked on these policies, we were told that they would stimulate domestic producers to improve efficiency and international competitiveness. However, this has not happened and our country's small manufacturing sector has actually been decimated.

Instead of addressing the structural challenges faced by our manufacturing sector, the neo-liberal economic policies have actually further eroded our country's manufacturing capacity.

During the 1960s, 1970s and 1980s, we tried to develop our manufacturing sector, hoping this would allow us to reduce our dependence on imported goods. We tried to promote the development of local firms to produce goods for the domestic market that had previously been imported. This was known as a policy of "import substitution".

But from the early 1990s, the International Monetary Fund (IMF) and the World Bank encouraged us to start producing for export and advised us and other countries in our region to start dropping import tariffs which they claimed would force our manufacturing sector to become more competitive. The reality, however, was different.

Trade liberalisation has, on the whole, negatively impacted on our manufacturing sector. As we cut our import tariffs, we were flooded with cheap imported goods. This caused many of the local industries to collapse. And our companies that targeted export markets in Europe and the United States lost their market share because they were unable to successfully compete with producers in China and other Asian countries. The result was a massive de-industrialisation due to companies closing down.

As a result, our manufacturing sector cannot grow under the current unfair economic and trade system, even if they try to become export-oriented. Thus, unemployment remains a massive problem.

In order to build a viable manufacturing sector, we will have to fundamentally change the neo-liberal economic policies that we have been so far following. This includes breaking the stranglehold of international institutions such as the IMF, World Bank and the World Trade Organisation and creating policy space for increased local manufacturing. But of course this cannot be achieved by Zambia alone. Thus, the states of the region would have to try to integrate politically and economically into a single bloc, based on fairness, and the drive for equality based on achieving common goals and meeting common needs.

The stronger economies of the region, such as South Africa, would have to move away from their individualistic interests and pave the way for an integrated or inclusive regionalism that creates backward and forward linkages between manufacturing and other sectors within and between the countries of the region.

And a sustainable increase in manufacturing in our country and in our region can only be achieved if the division between the formal and non-formal sectors is overcome. Production by small and medium-size enterprises must be promoted systematically. And a portion of the income must be taken from the formal sector and invested in the transformation of the non-formal sector. This is the only option for reversing the current de-industrialisation. But to achieve this, we need to drop our "business as usual" approach to regional integration where states continue to pursue their individualistic interests without any overriding common goals for the region.

The desire for regionalism has often stopped at the doorsteps of some narrowly defined "national interests" which were often far from "peoples interests" and thus undermined any kind of integrative regionalism. Such regionalism is built on states with compatible interests which serve a common objective and common good. Under integrative regionalism, links can be created between the manufacturing sectors of our region and the non-formal sectors can be gradually formalised. The productive capacity of our region will be systematically improved through such a bottom-up transformative approach that will overcome the restrictions of the enclave economy.
If we succeed in this, the issue of consumption of locally-produced goods will cease to be an issue.

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