Steel is the best proxy for Zim’s GDP: Stakeholders on EIS Strategy
By Ndanatsiwa Tagwireyi
Steel makers, foundry players, research institutions and representatives from the legal fraternity have underscored the importance of iron and steel in fueling Zimbabwe’s Gross Domestic Product (GDP) growth; holding that the steel value chain needs to be domesticated to reap maximum benefits.
This came out following the launch of the Engineering, Iron and Steel Sector (EIS) Strategy (2022-2026) recently. The strategic document outlines the roadmap to the transformation of this key industry which the Permanent Secretary in the Ministry of Industry and Commerce Dr Mavis Sibanda describe as the bedrock of the industrial growth and transformation of any nation.
The engineering, iron and steel sector has linkages with other sectors such as agriculture, mining, construction, education, tourism, health, among other productive sectors of the economy.
Speaking during a panel discussion on the role of engineering, iron and steel sector in economic growth, the Zimbabwe, Iron and Steel Company (ZISCO) Board Chair Engineer Martin Manuhwa noted that the country cannot underestimate the importance of steel, the nexus and its vitality in achieving Vision 2030 and agenda 2063 of the Africa we want.
“The steel value chain is the pillar of an economy; in any case, economists these days are saying that the best proxy for the GDP in any country is the steel, concrete as well as the number of cranes that you see at the airport, “Engineer Manuhwa said.
He holds that the steel industry needs to be owned and domesticated to promote many industrial value chains linked to the critical steel value chain.
“This value chain was ably led by ZISCO Steel before it was closed in 2008 when it stopped operations; it is indeed at that time when we were able to produce 1.1 million metric tonnes of steel and it is this steel industry that anchored not only the steel value chain but all the other industrial value chains like accessories from Zimbabwe Electricity Supply Authority (ZESA), National Railways of Zimbabwe (NRZ), Sables and from many other economies that grew out of the steel value chain.”
To Caleb Mucheche of Caleb Mucheche and Partners Law Chambers, “The downstream benefit that this strategy is likely to create is that target of 50 000 jobs.”
Zimbabwe Institute of Foundries President (ZIF) Itai Zaba implored stakeholders to prioritize value addition of scrap metal locally and supply foundries with adequate scrap needed and successfully do import substitution. While elaborating on this, Zaba revealed a huge scrap metal deficit that Zimbabwe Foundries are currently bedeviled with.
“Currently the foundry industry in Zimbabwe requires at least 27 000 tonnes of scrap metal per month; we are only getting 10 000 per month which is not adequate,” Zaba revealed. “We are running around 40% capacity utilization so indeed we have capacity to consume the excess metal allowed to stay for local use.”
Zaba flashbacked to the 1990s when over 22 large scale foundries were launched; they closed due to various reasons including issues of scrap which is being exported much against ZIF’s repeated lobbying for it to be stopped from being exported.
“We did an exercise a few years ago where we worked at how much scrap we could bring in if it was being used locally. On 10 000 tonnes, we noticed that we would likely bring in about $11 million dollars of products through our own production in this country as opposed to exporting scrap.”
“We are asking that when we look at the value chain, we must look basically at import substitution that is potentially available to us if we produce using the scrap that is available here,” holds Zaba
Zimbabwe Economic Policy Analysis and Research Unit (ZEPARU) Executive Director Gibson Chigumira weighed in on import substitution in the steel value chain noting that there should be a correlation between the growth of an economy and the consumption of steel like what is obtaining in China.
“Zimbabwe is a classic case of import substitution and I think so because, if you look at the explanations that have been given in terms of the raw materials for the production of steel and the proximity of all these raw materials within the same place, it gives us a competitive advantage against others who are producing steel but having to ship some of the inputs thousands of kilometers from the source,” Chigumira said.
Mucheche commended the spirit of economic competitiveness in the recently launched EIS Strategy noting that: “It actually tells what is in section 74 of the Labour Act when it speaks to areas of collective bargaining and I am also happy that employee participation was considered, agreeing with what is provided for in terms of Section 2a of the Labor Act which seeks to advance social justice and democracy.”