Zimbabwe - Overseas Development Institute

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75. For instance, m 1982, a 39% p r i c e increase was requested f o l l o w i n g a 25% r i s e i n domestic s t e e l p r i c e s (accounting for 80% of d i r e c t input costs) and an 18% increase was given a f t e r over s i x months delay. S i m i l a r l y i n 1985, a 20% p r i c e increase was granted f o l l o w i n g a 46% p r i c e r i s e a p p l i c a t i o n and t h i s r i s e was only given at the end of the p l a n t i n g season when the annual purchase of a g r i c u l t u r a l implements had taken place. 76. Although p a r t l y r e l a t e d to the drought years, Zimplow suffered an a f t e r tax l o s s of $22,000 i n 1983, no p r o f i t s recorded i n 1984 and f o r 1985 and 1986 an average a f t e r tax p r o f i t rate 40% lower than that achieved i n the three year period 1980 to 1983 (and at current p r i c e s ) . 77. Zimplow reported a post-tax p r o f i t of $124,000 (2% of turnover), while Bulawayo S t e e l Products's p r o f i t l e v e l was about h a l f that amount. 78. One needs to be e s p e c i a l l y wary of extending too f a r the argument e i t h e r that because f o r e i g n exchange f o r c a p i t a l investment has been at a low l e v e l for a decade or more or because machinery and equipment i s sold i t therefore needs r e p l a c i n g and r e p l a c i n g with new equipment. For instance, Bulawayo S t e e l Products maintains that even though most of t h e i r c a p i t a l equipment i s o l d i t remains adequate to requirements for both domestic and export production; and of that which needs to be replaced there e x i s t s q u i t e adequate second-hand equipment on the market. As for the argument from age, Bulawayo S t e e l Products are s t i l l using an 1897 press which i s w e l l maintained, quite adequate and c e r t a i n l y does not need r e p l a c i n g . S i m i l a r l y , both Lemco and the country's l a r g e s t tannery i n Bulawayo have machines that are pre-World War I and n e i t h e r company would wish to see them replaced. The experience of Metal Box Central A f r i c a provides yet another i l l u s t r a t i o n of the complexities of t h i s issue. Although the plant operated by Metal Box i s over 20 years o l d and f a r removed from the "state of the a r t " technology, senior personnel at the f i r m b e l i e v e that i t i s s t i l l quite adequate. The main reason i s that both the domestic and r e g i o n a l market i s small by i n t e r n a t i o n a l standards and as the company produces a wide range of products the key f a c t o r i s the a b i l i t y to adapt the machinery q u i c k l y to the d i f f e r e n t shapes and s i z e required. Not i n f r e quently only an eight hour machine "run" i s needed to s a t i s f y demand for a month or two whereas the new high-speed machinery can take up to four days to adjust and adapt ready to produce runs f a r i n excess of demand i n Zimbabwe and the region. , 79. The d i f f e r e n t i a l between the landed p r i c e of Zimbabwean products and a l t e r n a t i v e s has thus probably been widening. 80. I t should be added, however, that at l e a s t three firms have s t a t e d that they have been prevented from doing business with at l e a s t one SADCC neighbour because t h e i r firms have not allowed t h e i r s t a f f to provide back-handers and other i n c e n t i v e s as part of the export deal; as other i n t e r n a t i o n a l competitors do engage
i n such a c t i v i t i e s , Zimbabwean trade has thereby been c u r t a i l e d and orders worth many hundreds of thousands of d o l l a r s have not m a t e r i a l i s e d i n s p i t e of Zimbabwean products being p r i c e competitive. 81. A j o i n t venture of C h i l l i n g t o n s of the United Kingdom and the Government of Malawi. 82. Another Bulawayo f i r m reports a s i m i l a r problem with Zimbabwean t i n purchases. In mid-1987, the London p r i c e of t i n was £4,100 ($11,070) a tonne, but Zimbabwean purchasers had to pay the l o c a l Kamativi mine the d o m e s t i c a l l y - s e t p r i c e of $18,250 a tonne. However i n t h i s case, "some" discount would be provided i f the t i n was used i n manufacturing f o r export. This phenomenon does not always wort: against Zimbabwe's i n t e r e s t s though. For instance. Metal Box C e n t r a l A f r i c a (the Zimbabwe firm) i s able (at 1987 prices) to produce t i n - p l a t e at about 30% lower u n i t cost than i t s South A f r i c a n competitors even though the raw m a t e r i a l used by both Zimbabwean and South A f r i c a n t i n - p l a t e maimers comes from South A f r i c a ' s s t e e l plant ISCOR. The reason i s that ISCOR wants to maintain the Zimbabwe market (Zimbabwe exports upwards of 15% of i t s output) while Metal Box South A f r i c a does not b e n e f i t from export discounts for t h e i r exports. 83. When i t was not p o s s i b l e to export by road to Malawi, Tinto I n d u s t r i e s r a i l e d t h e i r Malawian exports down to Johannesburg and a i r - f r e i g h t e d them up to Malawi at an increased landed cost of 40%. In s p i t e of t h i s p r i c e hike, the Malawian market s t i l l purchased the Zimbabwean product rather than European and f a r cheaper " a l t e r n a t i v e s " . 84. In the year ended September 1986 t o t a l turnover of Hunyani was $68.8 mn, up from $39.8 mn i n 1982, with a f t e r tax p r o f i t s recorded of $$6.9 mn i n 1986 and $2.3 mn i n 1982. 85. Much i s made by Hunyani's management of the rate of i n v e s t ment (ROD as a measure of success i n business. This i s defined as the p r o f i t a f t e r tax but before extraordinary items expressed as a percentage of the share of shareholders' eguity. Hunyani's ROI f o r the year ended September 1986 was 12.42% and over the whole post-Independence period has f l u c t u a t e d from a low of 4.4% to a high of 15.8%. The management of the company maintains that the r a t i o needs to achieve a l e v e l of 25% as a minimum target. 86. Some years a f t e r UDI, the then Rhodesian Government i n t r o duced a u s t e r i t y c i g a r e t t e s onto the l o c a l market and since then (for over 10 years) no i n t e r n a t i o n a l c i g a r e t t e brands have been g e n e r a l l y a v a i l a b l e i n Zimbabwe. Nonetheless on a regular basis advertisements•for these i n t e r n a t i o n a l brands (such as Benson and Hedges) appeared i n the Zimbabwean press and provided the basis f o r other a d v e r t i s i n g such as at the race course where the "Benson and Hedges" race remains one of the most p r e s t i g i o u s events i n the Borrowdale annual r a c i n g calender.
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WORKING PAPER 25 INDUSTRIALISATION
Page 3 and 4:
TABLE OF CONTENTS Page I. INTRODUCT
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FIGURES 1. Ratio of Manufacturing V
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manufacturing i n d u s t r y devel
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sub-sector (9), Metals and Metal Pr
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Figure 3. Manufacturing Volume Inde
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i n v o l v e an i n c r e a s i n
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involve an i n c r e a s i n g net
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and 2, above, the f i r s t ten yea
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Figure 5. Sources of Growth 1952/3
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predominant source of growth has l
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Figure 1952/53 to 1982/3. o. 0 0 0
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period 1952/53 to 1982/83, Foodstuf
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i-iz Additionally, i t i s also imp
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Foodstuffs ( l ) t o a high of 60%
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P r o t e c t i o n C o e f f i c i
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s i g n i f i c a n t l y although
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While these successes deserve due r
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marginal) r i s e i n the 1966 to 1
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drop i n imports required by the ma
Page 41 and 42: Beyond these measures, however, per
Page 43 and 44: The main d i f f i c u l t i e s f
Page 45 and 46: of a year or two, p r o d u c t i v
Page 47 and 48: i n Malawi^1, which produces implem
Page 49 and 50: emoving exchange c o n t r o l s ,
Page 51 and 52: f e r e n t i a l s and hence the d
Page 53 and 54: Figure 13. Index of Industrial Prod
Page 55 and 56: s u b s t a n t i a l export expans
Page 57 and 58: paid for by higher domestic food p
Page 59 and 60: f u r t h e r capacity so to expand
Page 61 and 62: p r i o r n o t i f i c a t i o n ,
Page 63 and 64: increase throughput and i n s t a l
Page 65 and 66: V. AGRO-INDUSTRIAL LINKAGES 5.1 Mac
Page 67 and 68: F i n a l l y the data from Figure
Page 69 and 70: mn, compared with $310 mn used by s
Page 71 and 72: paper and packaging (1%); f e r t i
Page 73 and 74: 6% f o r cotton. With the greater a
Page 75 and 76: y the a g r i c u l t u r a l secto
Page 77 and 78: VI. COMCLUSIONS 6.1 Some Missing El
Page 79 and 80: o v e r a l l , 34% of a l l the in
Page 81 and 82: In s p i t e of f o r e i g n excha
Page 83 and 84: (1986b:62-63). 7. S t r i c t l y s
Page 85 and 86: low f o r manufactured imports both
Page 87 and 88: 29. As gross output data f o r i r
Page 89 and 90: 43. Regrettably the a v a i l a b l
Page 91: l e v e l s that both replacement i
Page 95 and 96: 94. In 1938/39, t o t a l food expo
Page 97 and 98: the l u c r a t i v e European (mos
Page 99 and 100: h i g h l i g h t e d the divergenc
Page 101 and 102: Clarke, D.G. (1980) Foreign Compani
Page 103: R i d d e l l , R.C. {1981a) "Zimba
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Zimbabwe - Overseas Development Institute

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