Manufacturing will be the epicenter of any stabilisation programme. In this regard, the expected outcome of STERP is to ensure that the current industrial capacity utilisation is increased from the current low levels of around 10% to over 60% in the next six months.
Achieving that has the multiplier effect of dealing with general economic recovery, unemployment, depressed demand and low income levels as well as poverty reduction.
In order to achieve capacity utilisation target of over 60%, the Inclusive Government will support the manufacturing sector through the establishment of an external credit facility for importation of raw materials, equipment for retooling, among other necessities.
The external credit facility will be available to all manufacturing entities in the country. However, strict criteria for accessing the facility will be put in place to avoid instances of abuse and misuse.
Furthermore, efforts will be made to ensure that the facility is largely restructured in favour of raw materials and other capital requirements as opposed to salaries and other administrative costs.
Total requirement for the above facility should be in excess of US$1 billion, for an initial twelve-month period, with potential to raise capacity utilisation from 10% to about 60%.
Efforts should be made to ensure that the facility is availed as a grant or on extremely generous terms given the low capacity for debt repayment.
Strategically Targeted Industries
Over and above this initiative, STERP will prioritise strategically targeted companies in various sub-sectors, which are key to the whole economy. These companies are being selected to ensure that 100% capacity is restored given their strategic importance in the economy.
In that regard, The Inclusive Government has identified critical industrial sub-sectors, and the respective targeted companies with the potential to invoke supply response to the rest of the other sectors of the economy.
These companies will therefore anchor and support the necessary overall economic supply response by overcoming the prevailing industrial output gap that has led to importation of almost everything that the country has capacity to produce and generate foreign currency.
Such targeted companies include those in the food processing, beverages, textile and ginning, clothing and footwear, fertliser, pharmaceuticals, motor industries, packaging, paper printing and publishing, chemical and petroleum products, non metallic mineral products, among others.
Strategically Targeted Retailing Companies
The current empty shelves in most wholesaling and retail shops located in both urban and rural areas are totally unacceptable and undermine confidence in the economy as well as potential capacity of the workers.
In this regard, it will be critical that The Inclusive Government normalizes the supply side of our retail shops. Improved availability of goods in the shops will also dampen inflationary pressures.
Consistent with the above, The Inclusive Government will prioritise and select strategic entities across the country to benefit from a Restocking Facility.
The local agro-input manufacturing industries, central to improved yields in the agricultural sector, also offer opportunity raw materials, benefiting from adoption of such technologies as fertilizer granulation and blending.
In this regard, measures will also be taken under STERP to take advantage of the availability of such local raw materials as phosphates, coal bed methane gas, among others, as part of the strategy to boost local fertilizer production.
This will be supported by appropriately determined prices to ensure viability of companies and sustenance of domestic production.
STERP recognises the need to stimulate investment. Therefore it is the intended objective of increasing investment capacity from 4% of GDP to over 25% of GDP. These increases are meant to underpin sustainable economic growth and development.
Priority for the new investment will be given to the area of technology to ensure that not only production capacity is enhanced, but also to fast track the country into a technological and industrial giant. The South East Asian Model will be embraced to inspire future transformative development programmes succeeding STERP.
The Inclusive Government is, therefore, instituting measures to business environment targeted at both domestic and foreign investors.
Creating an efficient regulatory environment is essential for enhancing a positive supply response.
This also entails sufficient devolution of decision making, coupled with streamlining of processes in key institutions such as Local Authorities and other public agencies so as to speed up the start up of business and investment projects.
Toll manufacturing collaborations also offer scope for improved capacity utilisation, while also strengthening regional trade and integration within SADC and COMESA.
Already, several companies are engaged in toll manufacturing and would benefit from broader SADC and COMESA support and promotion of these initiatives.
Small and Medium Enterprises, and Co-operatives
Small and medium enterprises and co-operatives are crucial in employment creation and growth as well as consolidation of indigenous ownership of resources in the economy. Because of their labour intensity nature, capital saving capacity, harnessing of local resources, dependence on fewer imports, flexibility and
adaptability, innovativeness and strong linkages with other sectors of the economy, SMEs become key engines for economic growth.
SMEs also provide practical solutions to challenges such as poverty and declining household incomes.
Key challenges facing SMEs include access to finance, capacity to conduct research and development, weak business structures, poorly defined business and regulatory frameworks, marketing constraints as well as insufficient management of resources.
Effective interventions under STERP will include financial support and capacity building. This will be complemented by promotion of industrial clusters and development linkages with other established companies.
SME Census & Database
In order to support the policy formulation process and provide clarity on the role and contribution of SMEs to the economic growth and development of the country, The Inclusive Government will carry out a census of SMEs. The information from the census will be used to create a database covering a wide range of issues such as the spread, concentration and numbers of SMEs, employment, product varieties and all other relevant economic indicators including their contribution to overall economic growth.
The project will be undertaken in collaboration with development partners and key stakeholders.
Industrial & Marketing Clusters
The Inclusive Government will support the development of industrial and marketing clusters and special zones in order to facilitate coherent development. These clusters and special zones will assist particularly SMEs mobilise bank finance, group marketing, bulk sourcing of raw materials, quality control and access to other business development services.
The financial sector will be mobilised to provide financial loans in order to improve product design and technology, common branding, marketing, research and development activities.
The special zones will be targeted at attracting investment to pecially identified sectors of the economy for enhanced productivity and growth. The specially designated zones will take account of proximity to critical amenities such as road, rail & air transport, as well as water among other facilities. The maintenance of such infrastructure will also be prioritised.
Relationship between small, medium and large scale enterprises will be fostered through incentives to enable small range from supply contracts and other sub-contracting activities to joint ventures.
For purposes of facilitating these linkages, The Inclusive Government will support the establishment of a Business Links
Office, which will offer advice, information, training and such other business support services.
This would go a long way towards supporting investment and growth in small to medium enterprises.
Recapitalisation of SEDCO
The Small Enterprise Development Corporation (SEDCO) will be recapitalised in order to fully play its role of financing, training and providing incubation to SMEs.