FOREWORD
The Industrial Development Policy provides guidelines for a new impetus for industrialisation in Zimbabwe. The Government is committed to playing its role as a facilitator for industrial development. Leading public enterprises, the Industrial Development Corporation (IDC) in particular and parastatals are expected to play key roles in the industrialisation process, and coordination among their strategic plans will be critical. The private sector will be expected to rise to the challenge of increasing capacity utilisation and value addition in the economy.

Our resolve as a nation is to transform Zimbabwe from a producer of primary goods into a producer of processed value added goods for both the domestic and export markets.

The various policy objectives are to use locally available raw materials, enhance investment in value addition, promote industries, strengthen clusters and revive closed companies, promote domestic and foreign investment, encourage capacity utilisation and retooling, enhance skills development, promote production of goods for domestic consumption and promote exports of manufactured goods.

In order to transform the objectives into reality, various strategies will be employed. Incentives and other forms of support will be provided to producers for both the domestic and foreign markets. Innovation, technology upgrading and value addition will be encouraged. In addition, land will be made available for development of Industrial Parks, adequate infrastructural support at affordable cost will be provided and the Spatial Development Initiatives (SDI) will be promoted.

The Government will simplify rules, regulations and procedures to remove bottle necks for smooth functioning of the industrial sector. Public enterprises/parastatals will be repositioned to enable them to efficiently and effectively provide services. The National Export Strategy will be implemented, to consolidate existing markets and diversification into non-traditional markets.

Meanwhile, the following thrust sectors have been identified: foodstuffs, textiles and clothing, leather and leather products, wood and furniture, drinks and tobacco, motor industry, metals/steel industry, electronics, pharmaceuticals, cement, fertiliser, jewellery, construction, agro-chemicals, arts and culture.

Overall policy guidance and direction for the implementation of the Industrial Policy will be provided at Ministerial level, whilst Industrial Task Forces will support the National Industrial Development Steering Committee.

I would like to thank the various stakeholders for their invaluable inputs. The various government ministries, parastatals/public enterprises, private sector, and the academia all contributed immensely towards the formulation of the homegrown policy. It is this unity of purpose that has culminated in this policy that should be utilised for the mutual benefit of all involved.

Zimbabwe has abundant natural and human resources, and a solid basic industrial base to make it succeed. I sincerely hope that this Policy will accelerate industrialisation in Zimbabwe.

Hon. Dr S.C. Mumbengegwi (MP)

Minister Of Industry And International Trade

1 INTRODUCTION

Background

The Government adopted a Policy Framework for Industrial Development Trade and Investment In Zimbabwe in 1999 which was crafted in generic terms and was expected to provide a basis to the Industrialisation process in Zimbabwe.

Since the launch of the Policy Framework, a twin track SME policy was launched to compliment the promotion and development of large scale enterprises. Given the present status quo in which the manufacturing sector has changed and dynamics and challenges unfolding in the global economy, it has become imperative to come up with a revised framework within which industrial development activities can be pursued. It is hoped that the Industrial Development Policy Review will provide lasting solutions to enable sustainable industrial development.

Manufacturing

Manufacturing is an important economic activity in Zimbabwe with significant contribution to Gross National Product (GNP), the country's export earnings and employment. It is diversified and well integrated with the rest of the Zimbabwean economy, exhibiting particularly strong linkages with agriculture, mining, construction and commerce.

Zimbabwe's manufacturing sector is well known for the diversity of its products. It is the leading sector in terms of contributing to GDP, accounting for about 20 percent of GDP and employing 17 percent of the labour force. The sector is an important contributor to the country's domestic supplies and export activities, with markets in America, Europe, Africa and the Far East. The sectors' exports are a reflection of the agricultural and mining base of the economy and the extent to which manufacturing beneficiates products from the extractive sector. The principal manufactured exports include ferro-alloys, clothing, metal products, chemicals, plastics and cotton-lint.

Agriculture

Major agricultural produce in the country include tobacco, maize, cotton, sugar, horticulture, wheat, oil seeds, coffee, timber, beef and dairy. Zimbabwe is a major exporter of agricultural products which contribute about 17% to GDP.

Mining

Major minerals extracted include gold, nickel, coal, chrome, iron ore, platinum, diamonds, black granite and precious stones. Mining contributes about 8% to GDP.

Tourism

Tourism contributes about 15% to GDP and a large proportion of the country's foreign exchange earnings.

Financial Services

This sector is the second most established and sophisticated in the entire Southern African Region. It contributes about 7% to GDP.

2 THE INDUSTRIAL BASE

Zimbabwe's manufacturing base owes its diversity to the development of locally available materials. After South Africa, Zimbabwe arguably has the most advanced industrial structure in Sub-Saharan Africa. In the late 1990s, manufacturing value added (MVA) per capita in Zimbabwe was about US$137 which was higher than US$72 for Sub-Saharan Africa as a whole. In fact, per capita MVA in Zimbabwe is high in comparison to each of the South Asian countries, which have large industrial sectors but not relative to the size of their populations. However, the absolute size of the Zimbabwean industrial sector is tiny by the standards of the more advanced Asian industrialising countries.

According to the Central Statistical Office, Zimbabwean MVA grew by an average 3,4% per year in the 1980s and declined by 1.7% during the 1990s. This trend continued into early 2000 because of persistent droughts and restructuring in industries which was taking place during the period.

Even with the relatively small industrial base, Zimbabwe's long tradition of industrial activity led it to deepen considerably its industrial structure and technological capabilities. By the 1980s, its manufacturing sector had, by African standards, high local content, the ability to manufacture a broad range of intermediate and capital goods, and to maintain and operate complex manufacturing technologies. In general, it had perhaps the most advanced engineering (metal-working) sector in the region, as well as the only integrated steel-making facility, outside South Africa. It is steel- making that dominates its heavy industrial activity.

The main gaps in the Zimbabwean industrial structure are the relatively low share in the manufactured value added of capital goods (electrical and non electrical machinery and agricultural equipment). These activities account for less than 8% of manufactured value added.

Zimbabwe deliberately pursues a policy that seeks to promote value addition, among others, in electrical and non-electrical machinery, agricultural equipment, agro-processing, mining and mineral based industries, chemicals/pharmaceuticals, wood and furniture, textiles and clothing, and motor industry.

The primary objective of this policy is to facilitate industrial development and expansion so that the manufacturing sector plays an important role in employment and wealth creation as well as enhancing foreign exchange earnings.

This policy gives a broad outline of what needs to be done. However, sub sector task forces are going to be set up with the responsibility to come up with detailed Action Plans for each sub sector. An institutional framework will see the implementation of these plans.

Although Zimbabwe's manufacturing sector is relatively advanced as compared to many developing countries, there is need to formulate policies that will sustain existing industries and influence investment decisions, by both local and foreign investors. The Government realises that the thriving local industrial base is not only essential in itself, but is also a positive factor in influencing new investors.

The Government believes in maximising capital investment in the country for accelerated economic development and the generation of employment opportunities. It is also committed to the creation of an environment conducive to growth of the industrial sector enhanced by inputs from the agricultural and mining sector. Government is determined to encourage investment to make maximum use of the country's manpower resources.

3 THE VISION

To transform Zimbabwe from a producer of primary goods into a producer of processed value added goods for both the domestic and export market.

4 THE APPROACH

The Government will achieve the above vision through the creation of a favourable business environment by providing all the support necessary for industrial development and creating an enabling environment. The Government will provide a conducive macro-economic environment to facilitate rapid and planned industrial growth of the country through private sector participation. To that end, it will strive to provide the infrastructure and amend laws to simplify procedures where necessary. Government is determined to make the country a pacesetter in industrial development.

Government is determined to take a leading role in the Industrialisation of the country through the use of its public and state enterprises such as Industrial Development Corporation (IDC), SIRDC, SEDCO and ZISCO with collaborative and coordinative support from other state enterprises such as NRZ, ZESA and Wankie Colliery.

The private sector will identify, recommend, and implement strategic action plans on a sub sector by sub sector basis ( cluster initiatives) and create employment conditions that recognise and respect the contribution of labour, which are motivational and provide rewards commensurate with performance.

5 OBJECTIVES

The Industrial Development Policy aims at establishing Zimbabwe as a major producer of industrial goods and services within the region.

The Policy focuses on attracting both domestic and foreign investment. There will be an accelerated implementation of infrastructure related projects and increased employment opportunities resulting in endogenous and balanced development countrywide. The main emphasis will be on the manufacturing sector, particularly, agro-processing, mineral processing, textiles and clothing, leather and leather products, motor industry, wood and furniture, jewellery, electronics, and other down stream industries.

The broad policy objectives are:

· To use locally available raw materials;

· To enhance investment in value addition;

· To promote industries, strengthen clusters and revive closed companies;

· To promote domestic and foreign investment;

· To encourage capacity utilisation and re-tooling;

· To enhance skills development;

· To promote the production of goods for domestic consumption; and

· To promote exports.

6 STRATEGIES

In order to achieve the objectives as enunciated above, the broad strategies to be employed are:

Ø To provide incentives for domestic production;

Ø To make concerted efforts towards innovation, technology upgrading and value-addition;

Ø To rationalise fiscal incentives for industrial development;

Ø To determine the causes of distress and revive ailing industries;

Ø To avail adequate financing of the productive sector;

Ø To make land available for development of Industrial Parks;

Ø To provide adequate infrastructural support at affordable cost for the efficient functioning of the industrial sector;

Ø To establish and promote Spatial Development Initiatives (SDIs);

Ø To simplify rules, regulations and procedures to remove bottle necks for smooth functioning of the industrial sector; and

Ø To establish sub-sectorial task-forces to spearhead industrialisation.

7 REPOSITIONING OF PUBLIC ENTERPRISES/PARASTATALS

7.1 Industrial Development Corporation (IDC)

The IDC was created by an Act of Parliament with the aim of undertaking new investments and resuscitating distressed companies. It is strategic in the process of industrialisation. Its main objectives are as follows:-

§ To be an agent for the creation of domestic and regional enterprises, which produce value added goods and services for the domestic and export markets.

§ To be a centre for industrial opportunity research and commercialisation in Zimbabwe.

§ To achieve the objectives through sound business principles, best management and industry practices.

Industrial projects

IDC will be directed to invest in projects which enhance value addition of products for both the domestic and export markets.

IDC will develop investment opportunities into projects, document and evaluate the projects for commercial viability, seek technical partners, mobilise funding and implement the projects or facilitate implementations by others by providing information. Information on investment opportunities is already being disseminated to various potential investors.

IDC will set up a motor componentry manufacturing industry with a view to producing components locally. IDC will spearhead investments that will form the basis of the country's Motor Industry Development Policy.

Facilitation of implementation of industrial projects.

IDC, through Sunway City Harare, will facilitate speedy implementation of industrial projects through the provision of factory shells and serviced industrial land.

Support for Agricultural Industry

IDC will continue to support the backbone of the economy by providing farmers with fertiliser and agricultural lime through its subsidiaries.

IDC will also facilitate growth of the agricultural industry by providing markets for agricultural products in the form of agro-processing facilities to be situated close to the farming areas. IDC, through its subsidiary, Agrotech , is in the process of implementing a multi fruit processing plant in Rusitu Valley, where the greater part of fruits such as mango, guava, pineapple and avocado-pear have been rotting each year due to lack of transport, storage or processing facilities. The hectares under these fruits could be easily increased once the fruit processing plant becomes operational.

Agrotech will focus on agro-processing ventures (direct and outgrower crop production and value addition) specifically:-

o mushrooms

o organic foods

o multifruit

o replication of the Chegutu based Bonnezim model

o lease arrangements for the Zagrinda plant in Norton

o commercialisation of information from stakeholder workshops,etc.

IDC will establish a new company to assemble tractors and manufacture implements and spares, including motorcycles and tricycles for farming operations.

7.2 Scientific and Industrial Research and Development Centre (SIRDC)

The development of science and technology is essential for Zimbabwe's overall socio-economic advancement. The wide spread application of science and technology will provide more effective and sustainable means towards achieving a competitive, diversified and global based economy in order to attain higher standards of living in the future.

SIRDC will be emphasising research and development and will concentrate on market driven and economically viable projects. In this regard, SIRDC will undertake the following:-

v Product Development ;

v Technology Unpackaging/Technology Transfer ;

v Best Practices;

v Development of Industrial Capacity;

v Identification of Areas of Rapid Development Need; and

v Standards Development in collaboration with the Standards Association of Zimbabwe (SAZ).

National Productivity Centre (NPC)

The NPC will undertake the following initiatives:-

· Carrying out studies to establish sector by sector productivity levels;

· Benchmarking the productivity for each sector;

· Facilitating the training of both managers and employees to enhance productivity; and

· Carrying out productivity awareness campaigns.

Government will provide funding for the NPC in order to operationalise the Centre.

7.3 Department of Science and Technology Development

Government through the Department of Science and Technology Development will strive to promote and facilitate the development of inventions, innovation and enterprise development with the ultimate goal of commercialising the products from these activities.

7.4 Agricultural And Rural Development Authority (ARDA)

· Although ARDA`s main focus is on production of primary agricultural products, the parastatal is a strategic one in the field of Agro-processing.

ARDA will mobilise small scale farmers to indulge in agro-processing in areas such as fruits, vegetables, tomatoes and others. The organisation will partner IDC and SIRDC in spearheading the agro-processing industry.

Its main domain will, however, be to supply the agricultural produce to IDC for processing. Agro-processing by IDC will be spearheaded by its subsidiary, Agrotech.

It is proposed that for a quick turnaround in the domain of Agro-Processing, a synergy has to be blended between the activities of ARDA, SIRDC, ZIMTRADE and IDC.

7.5 National Railways of Zimbabwe (NRZ)

The National Railways of Zimbabwe provides rail services to the country. The Government is committed to remove any capacity constraint at NRZ since bulk deliveries such as coal, tobacco, minerals, cotton lint, sugar, maize and fuel depend on this parastatal.

The organisation is undergoing restructuring in order to provide convenient service in transportation to industrial cargo, among others.

7.6 Energy : ZESA/WANKIE COLLIERY/NOCZIM

Industrialisation requires that the country pursues measures that ensure a strong and reliable energy supply base, particularly on electricity, coal and fuel. The management of parastatals involved in these areas must, therefore, be synchronised. The country's energy requirements are entrusted to the Zimbabwe Electricity Supply Authority(ZESA), Wankie Colliery and National Oil Company Of Zimbabwe(NOCZIM).

v Zimbabwe Electricity Supply Authority (ZESA)

Zimbabwe is a net importer of electricity . A stable supply of electricity is required if the country's productive sectors are to register a quick turnaround in response to the supportive measures being implemented.

ZESA will be called upon to use tariff rates that support the process of industrialisation while not compromising its survival.

v Wankie Colliery Company Ltd

The company supplies coal to the productive sectors. Its coal supplies are also used in the generation of electricity at the Hwange Thermal Power Station.

A package will be put together to enable participation by ZESA in coal mining activities so as to enhance power generation.

v NOCZIM

NOCZIM will focus its attention on supplying critical sectors of the economy such as Government Departments, Parastatals and agriculture, while private oil companies will supply the rest of the economy. NOCZIM is also responsible for building national strategic reserves which are important in the industrialisation process.

7.7 Zimbabwe National Water Authority (ZINWA)

Water is a prerequisite for industrial development and growth. ZINWA will ensure that adequate and affordable water is provided for successful industrialisation.

7.8 Telecommunications

An efficient and effective telecommunication network is important in supporting the industrialisation efforts.

Although there is wider participation in the provision of communication services, the Government will put greater efforts in supporting this sector.

7.9 Zimbabwe Iron And Steel Company (ZISCO)

The company is strategic to industry since it is a major supplier of steel. Steel products are required in construction, agriculture, mining and manufacturing. ZISCO will be involved in value addition activities on its steel products. This is paramount in the process of industrialisati

8 INFRASTRUCTURE DEVELOPMENT

Infrastructure is one of the critical elements necessary for speeding up industrial growth in the country.

It is in light of this that Government would put into perspective appropriate measures aimed at facilitating the public and private sectors to participate in infrastructure development. An Infrastructure Development Committee (IDC) will be established with its membership drawn from the relevant stakeholders.

The Committee will work in close cooperation with the Zimbabwe Development Bank whose mandate will be to mobilize financial and technical resources of appropriate duration and cost, to spearhead and support the infrastructure maintenance and development needs.

In 1998, the Government of Zimbabwe initiated a policy for Public -Private Sector participation in infrastructure provision (P.P.P.I). This policy stance was taken upon recognition of Government's slender resources, and its limited capacity in meeting the growing demand for public goods and services. If the private sector is given the appropriate support and incentives, it can gradually make large and indispensable contribution to the development of the economy.

The major goal of Public Private Sector partnerships is to promote sustainable economic growth and development, through mutual collaboration between Government and the Private Sector in the efficient and effective management and operation of infrastructure and their development in the economy.

The objectives are:-

· To reduce pressure on the fiscus by sharing the burden on infrastructure provision.

· To enhance efficiency in service delivery

· To improve access to modern technology, skills and expertise

· To create opportunities for development

· To promote and stimulate inflows of direct foreign investment.

· To promote indigenous entrepreneurs' participation in infrastructure provision.

· To improve the use of local resources in the development of the country.

To this end the Government has laid down guidelines for public-private sector partnerships. The partnership will enhance efficiency and effectiveness in the delivery of public goods and services thus ensuring and accelerating sustainable economic development.

The public - private partnerships shall take various forms such as management contracts, leases, concessions, demonopolisation and full divestiture (sale) of enterprises where possible. Incentives to encourage both domestic and foreign investment in infrastructure development projects will be put.

Cognisance will be taken of the need to encourage the development of sectoral clusters of the targeted industries. On that score, Government has already embraced infrastructural development concept as evidenced by the Build, Operate and Transfer (BOT) and Build, Operate, Own and Transfer (BOOT) of the constructed Beitbridge-Bulawayo Railway line (BBR).

As part of a strategy to promote rural based agro-industries, it is proposed that factory shells be established in growth points. This facility will be available on demand for rentals by entrepreneurs.

The existing infrastructure will be upgraded and maintained in good condition. Social amenities to support industrial parks will be provided wherever they are needed.

9 INFORMATION AND COMMUNICATION TECHNOLOGY (I CT)

It is recognised that the ICT sector has grown tremendously in the last decade or so and that those countries with a strong ICT sector have experienced faster growth. Zimbabwe must transform itself into an ICT powerhouse. Government considers ICT as an agent for transformation of every facet of human life, which will bring about a knowledge based society.

The country must accelerate the drive for setting up an efficient Information-Infrastructure. Government will play a co-ordinating role with private entities involved in putting together the Information Infrastructure and actively put connectivity to the last kilometre.

The country should speed-up the rate of computer penetration so that it reaches a penetration of one per 25 people by the 2015. Towards this end efforts will be made for a rapid spread of IT awareness among the citizens, propagation of IT literacy, net-worked government IT-led economic development, rural penetration of IT applications, training citizens in the use of day-to-day IT services such as tele-banking, tele-medicine, tele-education, tele-documents transfer, tele-library, electronic commerce among others and training qualitatively and quantitatively of IT professionals. Government will play a co-ordinating role with private entities involved in putting together the Information Infrastructure and actively put connectivity to the last kilometre. To assist in this regard, any renovation of roads, new power lines and any other new developments should look into the possibility of adding Optical Fibre net works in these projects.

The country should strive:-

- To provide Information infrastructure to all areas with access to power.

- To earmark at least 2% of all departmental budgets for IT related development

- To re-orient ZIPAM to bring about IT competency to public Administration.

- To shift from labour intensive industry/economy to capital-intensive industry/economy. .

- To improve marginal productivity of capital inputs or investments at shorter gestation periods.

- To put more emphasis on productivity.

- To increase the contribution of total factor production to output, i.e. knowledge improves skills and technology application.

- To improve innovative capacity.

- To add new value to existing activities and processes. An assessment using input-output analysis confirms that knowledge-intensive industries have a higher value-added multiplier and higher productivity compared to non-knowledge intensive industries.

- To narrow the knowledge divide.

10 HUMAN RESOURCES DEVELOPMENT

Skills development is the key to quality and productivity. It also ensures employment of local people in sophisticated industries. New technology and tools are being developed which must be made available to the youth for optimal utilisation of resources.

The country has some good educational and technical institutions. These should be strengthened to meet the needs and challenges of the future. The educational institutions must be dynamic and be able to cope with ever changing needs of industry. This calls for the institutions to work hand in hand with industry.

Availability of highly skilled, specialised personnel is key to successful implementation of the industrialisation process. Institutions of higher learning must keep on producing adequate skilled manpower. In this light government will put in place policy measures in order to curb brain drain.

10.1 Synergy Between Educational Institutions And Industries

The following initiatives would be undertaken by Government to strengthen the linkages between Educational Institutions and Industries:-

§ Tailoring the curriculum in line with the requirements of the industry to enable a person to make meaningful contribution to the economy;

§ Specialised home grown courses would be introduced and adjusted for specific strategic sectors over a period of time;

§ Industrial Parks to house extensions of Universities; and

§ The private sector will be required to participate in human resources development for the benefit of industry.

11 TRADE POLICY

The Trade Policy is aimed at supporting increased value addition as espoused in the Industrial Policy. It also aims at diversifying the export basket. It will consolidate the existing markets and diversify into non-traditional markets.

11.1 Export Development

In this age of liberalisation and globalisation of the economy, the importance of exports for economic development cannot be over emphasized. Various measures are being proposed to boost the export of various goods. The Government will put in place The National Export Strategy(NEX), with comprehensive policy measures whose main thrust is to lead towards an effective export promotion package.

The specific objectives of the National Export Strategy (NEX) are to:-

· Achieve a shared vision on exports-led growth;

· Promote investment and development;

· Enhance exports;

· Promote local value addition;

· Consolidate existing markets and diversify into non traditional markets.

· Enhance the competitiveness of Zimbabwean products on the regional and international markets.

· Develop an export culture and positive change of attitude among the business entrepreneurs and;

· Exploit comparative advantage and develop new industries.

11.2 Trade Promotion Officers

The country places great emphasis on export development as a strategy to revitalise its industrial base. To this end deployment of Trade Promotion Officers in strategic export markets will be intensified. This will go a long way in consolidating the economy's position on the world market. Vast export enhancement opportunities exist which need to be exploited. Already potential areas have been identified within COMESA, the Far East and South America. If these opportunities are fully exploited exports will boost the economy's endeavor to industrialise.

With a view to boosting exports, the Government formed "ZIMTRADE", an export promotion body. ZIMTRADE's role is to spearhead the opening up of new export markets as well as consolidate the existing export markets.

Industries will have to explore all the avenues for the promotion of their exports. Companies will be encouraged to take advantage of the existing bilateral, regional and international trade agreements.. In this regard the country has more than 40 bilateral trade agreements, which fall into the category of Most Favoured Nation (MFN) status.

Zimbabwe has also bilateral preferential trade agreements with Botswana, Malawi, Namibia, Democratic Republic of Congo, Mozambique and South Africa. Preferential treatment based on the principle of value-addition encourages industrialisation. Furthermore, industrialisation will trigger the manufacturing sector to increase its market penetration and development. Zimbabwe will continue to seek more preferential trade agreements with other countries in line with some provisions under the World Trade Organisation (WTO).

The country realises that multilateral trade agreements also play a pivotal role in our export-led strategy. The importance of large markets as a basis for increasing direct trade flows and the establishment of industrial capacities cannot be over-emphasized.

Cognisant of possible intrinsic benefits derivable from multilateral trading arrangements, Zimbabwe is a member of the following organisations:

§ Southern African Development Community (SADC);

§ Common Market for Eastern and Southern Africa (COMESA);

§ African Caribbean and Pacific States/European Union Agreement (ACP/EU);

§ Regional Integration Facilitation Forum (RIFF);

§ Generalised System of Preferences (GSPs);

§ Global System of Trade Preferences (GSTPs);

§ Group of Fifteen (G15); and

§ World Trade Organisation (WTO).

11.3 SADC

SADC has a membership of 14 states which together has a population of about 185 million. The existence of the SADC trade protocol will facilitate Zimbabwean 921273">

11.4 COMESA

COMESA has a membership of 20 states, which together, have a population of about 380 million. It is envisaged that under COMESA, Zimbabwe's manufacturing sector will benefit from the gradual reduction and eventual elimination of tariffs throughout the region. This will enable the sector to import inputs from other member countries duty-free, thereby enabling the country's manufactured exports to have a competitive edge in both member and non-member countries.

11.5 ACP/EU

ACP/EU is a grouping of 71 African, Caribbean and Pacific (ACP) states linked to the 25- STATE European Union by a mutual cooperation framework. Zimbabwe will pursue negotiations of the partnership agreement with a view to creating a conducive environment for the continued expansion of our industries.

11.6 Regional Integration Facilitation Forum(RIFF)

The RIFF embraces 14 countries. Its primary aim is to fast-track the implementation of programmes undertaken by COMESA and other regional groupings in order to achieve regional integration, which is a key component of industrialisation.

11.7 Generalised System of Preferences (GSPs)

The GSPs contributes to the economies of developing countries by allowing qualifying goods to enter markets of preference-giving countries at reduced or zero rates of duty. Zimbabwe is one of the 125 beneficiaries of this agreement which was arrived at, at the United Nations Conference for Trade and Development (UNCTAD).

11.8 Global System of Trade Preferences (GSTPs)

The GSTPs is a global framework of establishing trade preferences and other trade - promoting measures to facilitate national production and the expansion of trade among developing countries. Zimbabwe will continue to identify trade opportunities and negotiate trade concessions with partner trading countries under agreed rules and procedures.

11.9 Group of Fifteen (G15)

The G15 was established to spearhead cooperation in investment, trade and technology. Zimbabwe will, in line with the objectives of G15, call upon the private sector to support the group's initiatives and to strengthen networking through the G15 Federation of Chambers of Commerce.

11.10 World Trade Organisation (WTO)

Zimbabwe will take advantage of the existence of WTO to expand its trade at a global level although some factors such as technical barriers to trade, quotas, and high import tariffs imposed by developed countries militate against its exports.

Zimbabwe's status as a developing country meant that it would not make major market opening commitments under WTO. However, this does not mean that Zimbabwe's economy will escape the effects of WTO rounds of negotiations particularly in foreign markets.

Zimbabwe places great importance to exports in revitalising its industrial base. Research has shown that there is a strong positive relationship between the levels of exports and industrialisation.

The country will not only focus on import substitution strategy, but on export-led strategy through the above organisations in order to support the country's manufacturing capacity. Companies that produce for export will be given priority in financial assistance.

11.11 Developing Product - Country Matrix

A "Product-Country" matrix will be prepared where products with export potential and the countries which offer maximum advantages in trade will be shown. Zimbabwe will put emphasis on products where it has comparative advantage.

Research on which products to include in the matrix will cover, among others, the following products.

· Clothing and Textiles

· Footwear and other leather products

· Meat products

· Dairy products

· Grain milled products

· Other foodstuffs

· Beverages

· Manufactured tobacco

· Wood products

· Metal products

· Transport equipment

· Chemicals and plastics

· Jewellery

· Rubber products

· Paper printing and stationery

The analysis will be done taking into account that within the 'pure' manufacturing group, the largest increase in earnings used to come from the agro-processing group (22%), followed by the textile, garment and footwear group (18.7%), jewellery and other products (17.1%), wood products and furniture (15.7%) and chemicals related (14.4%). Capital goods is the lowest, contributing 12%. In developing the product-country matrix, non traditional markets in the region, South America and the Far East should also be considered and traditional markets will be consolidated.

11.12 Participation At International Trade Fairs And Expos

Participation in international fairs and expos will assist in projecting the national heritage and aspirations of Zimbabwe.

The Government will book space, through its agencies, in certain strategic international trade fairs, where specific products from small and medium scale companies will be exhibited. The space will be offered to these companies at concessionary rates in order to make them cost effective. Small and medium scale industries will have the opportunity to promote their products and be exposed to international trends in quality and technology.

11.13 Tariff Regime

The tariff regime will be first and foremost an instrument of industrialisation with revenue aspects being secondary. The long-term aim of the tariff policy is to progressively reduce the overall levels and to narrow the spreads in line with SADC, COMESA and WTO. The Competition and Tariff Commission will play its role of ensuring that it encourages and promotes competition in all sectors of the economy. It will also ensure that it addresses issues pertaining to dumping as it disadvantages local producers.

11.14 Export Facilitation Measures

v The Government will facilitate the setting up of an Air Cargo Hub near the Harare International Airport. This would give the desired impetus to the export of flowers, fruits, vegetables and other relevant commodities. The setting up of the hub could even attract business from countries such as Malawi, Zambia ,Mozambique and elsewhere in the region.

v It is proposed that Inland Containers ports be developed at all border posts particularly in Mutare, Beitbridge and Chirundu Border posts to handle goods to and from other countries.

v Efforts will be made to increase exports to the region, taking advantage of opportunities offered by our membership in SADC and COMESA.

v Zimbabwe is pursuing strategies that will enable it to open new export markets. Non- traditional markets have been identified within the region, South America and the Far East. The rapidly industrialising markets of the Far East offer many opportunities for Zimbabwean exports.

v The exports of higher value added products will be encouraged.

11.15 The Role of Zimtrade.

The establishment of Zimtrade in 1992 was a result of the "Zimbabwe Export Promotion Programme", which sought to pursue innovative strategies to promote Zimbabwe's exports. Zimtrade is involved in Trade Development which incorporates export development, trade information and events coordination (i.e. trade fairs and exhibitions).

The organisation also deals with SMEs export support services, catering specifically for new exporters.

11.16 Export Incentives

The Government places great emphasis on export enhancement, subsequently it has put various export incentives which exporters can take advantage of. The policy thrust is to ensure that business operational environment for exporters is a enabling. Additional export incentives will be put in consultation with all stakeholders.

12 INVESTMENT PROMOTION.

Zimbabwe is one of the most strategic and viable destinations on the continent for investment in the manufacturing sector. Albeit the various sub-sectors of the economy are amicable to investment, special emphasis will be placed on agro-processing. Ample investment opportunities have been ushered in by the successful completion of the Land Reform Programme.

In that regard, both domestic and foreign investment will be accorded equal treatment. Investment will be focused and targeted at those sub-sectors in our economy that have demonstrable international competitiveness. In addition, our investment principle will be to encourage increased participation and ownership by the indigenous people of the country in a vibrant manufacturing sector. This is achievable through joint ventures with foreign investors with a view to facilitating the transfer of technology and capital inflow.

The Government will play a major role on promoting investment through the simplification of rules, regulations and procedures. Furthermore, it will provide a conducive environment including physical infrastructure, skilled and unskilled labour, technological and scientific research and development facilities, and sound financial support infrastructure, predominantly through private sector involvement.

12.1 Spatial Development Initiative (SDI )

A Spatial Development Initiative is a short-term investment strategy whose main goal, among others, is to unlock latent economic potential in a specific geographical area. The programme is in line with the economic vision of the SADC member states, which is targeted at transforming the member states' economics from operating as individual, fragmented markets, into a single, integrated, vibrant and globally competitive market, characterized by free movement of goods, services, capital as well as labour.

The SDI strategy requires that regional governments take measures to open up development corridors (SDIs) in a number of ways, which include:

Ø Generation of local resource-based sustainable economic growth in under -developed areas;

Ø Broadening of the economic ownership opportunities for disadvantaged communities;

Ø Mobilisation of both domestic and foreign investment into the SDIs through national investment agencies.

Ø Removal of constraints to growth in those corridors with under-utilised economic potential;

Ø Development of human resources through sector- specific skills development as well as supporting programmes aimed at micro and small-to-medium enterprises;

Ø Creation of long-term employment for the corridors' inhabitants and for participating countries as a whole; and

Ø Development of new infrastructure with minimum drain on government coffers through the formation of smart -partnerships with the private sector in the field of roads, telecommunications, dam construction, power generating plants among many others.

To date, the following SDIs have been identified within the SADC region:

· Highveld Development Corridor(HDC) SDI : Zimbabwe/Mozambique

· Zambezi Valley( ZV) SDI : Zimbabwe/Mozambique/Zambia/Malawi

· Beira Development Corridor (BDC) SDI : Zimbabwe/Mozambique

· Limpopo Valley (LV) SDI : Mozambique/Zimbabwe/South Africa

· Trans-Limpopo (TL) SDI : Zimbabwe/South Africa

· Okavango Upper Zambezi International Tourism Initiative (OUZITI) SDI: Zimbabwe/Zambia/Botswana/Namibia/Angola.

12.2 Incentives for Investment.

Zimbabwe's system of investment incentives has evolved considerably over the years reflecting the new openness to inward investment. At present, Zimbabwe has incentive schemes for inducing foreign and domestic investment into the economy: the Growth Points Scheme and the Special Mining Leases Scheme.

The Growth Points Scheme is largely a tool of regional policy which seeks to allocate investment to deprived regions through a time bound low corporate tax on net profits and an investment allowance.

The Special Mining Leases Scheme provides tailor-made incentives for large, export oriented mining projects. The Government will customise and fine-tune investment incentives to the requirements of specific groups of investors.

12.3 Domestic Trade Incentives

The Government will give incentives to companies that produce for the domestic market. This is so since the consumption of the local products will lead to industrialisation.

13 INDUSTRIAL FINANCE

It is a reality that inadequate finance is one of the biggest bottlenecks in the rapid growth of the economyof a country. Hence, appropriate measures will be effected to promote the easy flow of finance to the productive sectors of the economy. In that perspective, the RBZ introduced the Productive Sector Finance Facility to principally, assist all the productive and export sectors of the economy.

Under the facility, statutory reserves contributed by financial institutions are made available to commercial and merchant banks for on-lending on a revolving basis. In that regard, banks should assist in the efforts to accelerate the flow of credit to industry with special emphasis on SMEs. These will be in the eligible productive sectors of the economy which includes, among others, agriculture mining, manufacturing, construction, transport, tourism and communication. Concessionary funding will continue to be used as a tool of industrialisation. Other financial institutions will be encouraged to channel resources to start up business. Support will also be given to companies for recapitalisation.

It is proposed that Government sets up a Technology Upgrading Fund in the form of a Venture Capital. The funds will be released on a selective basis on recommendations of a High Level Committee. Its main objective would be, inter-alia, to improve technology and modernise industries using outdated technology but can become competitive if new technology is introduced. In this regard, the Research Council of Zimbabwe (RCZ), SIRDC and NUST could be very useful.

13.1 Start Up Capital

Government recognises the need to provide adequate long term capital for industrial development. To this end, it will mobilise resources to ensure provision of long term capital. Industrialisation requires adequate long term start up finances, that will fund green-field projects. It is important to provide long term finance because capital equipment requires significant funding.

14 DISTRESSED INDUSTRIES

The Government will put every effort into the revival of potentially viable but ailing industries for overall industrial growth of the economy. Distress in industries does not affect only the revenue to fiscus but impacts negatively on employment opportunities and productive investment.

It is a known fact that "prevention" is better than "cure." It is in that context that periodic co-ordination meetings between Government, industrialists, entrepreneurs and financial institutions will be held in each region. It is at such fora that the status of various industries would be reviewed to ensure early detection of distress so that preventative measures can be instituted.

An Early Warning Unit will be set up within the Ministry of Industry and International Trade to consider the revival of distressed companies.

Distressed companies identified by the Unit will have appropriate packages of relief and concessions approved for their rehabilitation. The Unit will periodically monitor the progress of the funded companies.

15 SMALL AND MEDIUM ENTERPRISES

Promotion of small-scale industries is among the priorities of Government. The sector is increasingly viewed as an important engine for employment creation and economic growth. Furthermore, given the Small, Micro Medium Enterprises' (SMEs) high labour to capital ratios, the Industrial Policy Framework recognises SMEs and the need to encourage SMEs to spread and grow in order to reduce unemployment.

An SME Policy has been put in place to support and sustain the development of the SME sector. This sector provides employment opportunities to large sections of societies. It has, in addition, immense export potential, which needs to be exploited to earn valuable foreign exchange for the country.

The sector has matured over a period of time driven by the business acumen of the entrepreneurs in terms of their technical skills and capability to run units with lower overheads. There is need to strengthen SMEs in terms of an array of needs like, capacity building, infrastructural support, financing, technology up gradation, quality improvement, research and development, market access and others.

15.1 Cluster Development

Various clusters have been identified in the manufacturing sector consisting of large numbers of SMEs. Each of these sectors is located in clusters spread throughout the country, particularly in growth centres, towns and cities. Effort will be made to identify clusters in rural areas.

Clusters have the potential of enjoying economies of scale where their activities have been strengthened. The Government, with the help of other stakeholders, will empower clusters by providing need-based financial assistance. Detailed guidelines for assistance will be laid down separately. The assistance will help clusters in up-gradation of product design and technology, quality improvement, common branding and marketing, research and development activities and development of common facilities such as testing and certification laboratories, capacity building for workers and other common infrastructure facilities.

15.2 Cluster Associations

The Government will encourage the formation of Cluster Associations in order to facilitate a coherent approach. The Associations will assist their member units to tie up bank finance and at the same time will also help the banks to recover their dues.

· Cluster Associations will be encouraged to approach financial institutions which will avail finances to members. The banks will be closely monitored and regulated in terms of human resource development and arrangement of funds.

· The associations will maintain an information bank of the opportunities available for cluster products.

· Common branding and marketing will be encouraged by the associations. This will project Zimbabwe as a leading producer of certain brands which are of high quality.

15.3 Development of Linkages

Relationships will be fostered between small and medium scale enterprises and large scale enterprises. The types of linkages can range from simple supply contracts to joint ventures and partnerships. This enables small firms to provide technical assistance to large corporations through production designs, drawings, quality control and just-in-time inventory and delivery schedules. Linkages constitute essential requirements necessary for SMEs to move into a competitive position.

15.4 Business Links Office

The primary source of support and advice to SMEs in Zimbabwe should be via a local "Business Links" office. There had been a wide range of support available for SMEs from an array of different sources, but from the customer perspective it is often difficult to identify and access the type of assistance most suited to their needs. The intent behind Business Links is to end this fragmentation of help and advice to local companies, and offer an improved and more comprehensive service, through a single point of access.

The Government proposes the formation of Business Links office which offers the business access to high quality advice, information, and other business support services. Business Links will be created from an amalgamation of a range of services previously available at a local level through Government, Chambers of Commerce, local Authorities, Training and some Enterprises to form a national network of local partnerships between the business community and Government.

The target customers for business Links are primarily firms with potential for growth. Support will be available to start-ups and micro-businesses and includes business counselling, training seminars, business clubs, advice (e.g. on finance, regulation, and workshop provision) and more specialist help.

The Government will pursue programmes that will attach small enterprises firmly into the backward and forward linkages of larger enterprises.

15.5 Factory Shells

The Ministry of Local Government, Public Works and National Housing will facilitate provision of land for factory shells. This will be done through Local Authorities. Factory shells at growth points and industrial areas should be allocated to entrepreneurs for the purpose of setting up their industrial units on reasonably long leases at reasonable rates. The rents payable should be reviewed periodically. The shells allocated for the purpose of setting up industrial units shall not be used for any purpose other than the purpose for which the land has been leased. IDC, EPZA and SEDCO will also complement Government efforts.

16 THE PRICES AND INCOMES STABILISATION PROTOCOL

The Social Partners, namely Government, Business and Labour under the Tripartite Negotiating Forum are committed to the management of prices and incomes in order to ensure price stability and low levels of inflation.

The Social Partners agreed to manage the prices of basic commodities and essential services on the principles of business viability, competitive market structures, affordable prices and participation of all stakeholders in managing price movements of critical goods and services.

The management of wage and salary increases will be applied to both public and private sectors on all incomes through the normal channels of collective bargaining. The Social Partners agreed to share the burden of economic stabilisation among themselves with specific obligations of each social partner clearly spelt out.

17 ENTREPRENEURSHIP DEVELOPMENT

Development of entrepreneurship is prerequisite in industrial development. This enhances resource exploitation thus stimulating economic growth. Government's major objective is to support the creation of the next generation of entrepreneurs. An increasing number of new business will be needed to replace those which are existing on an annual basis and to create the country's future jobs and investment opportunities. The objectives of entrepreneurship development are to increase a pool of people with career orientation, ability to start their own businesses and to improve their chances for survival and growth. Focus will be directed at informal traders such as at "SIYASO" and Home based Industries.

The ultimate outcome is new venture creation and job generation. The challenge is on the educational institutions to build an entrepreneurship culture.

The following are the strategic objectives:-

· Develop partnerships with the media in the widespread public promotion of entrepreneurship and credible role models.

· Increase opportunities for people to learn the process of becoming entrepreneurs and starting business through orientation and education system.

· Build networks between and among entrepreneurs, support agencies and government.

· Enhance the quality of business support services through professional development of business counsellors and economic developers.

· Support research on entrepreneurship and business issues and trends to increase knowledge of how entrepreneurship emerges within the economy.

· Integrate courses on Entrepreneurship Development into the curriculum of various training and vocational institutes.

· Establish an Entrepreneurship Development Institute (EDI).

· Establish Business Opportunities Programmes.

18 THRUST OR PRIORITY AREAS

Zimbabwe is endowed with a variety of natural resources, which have potential to develop it to an economic jewel of Africa. The country enjoys moderate climate, good rainfall, fertile land, well developed road and rail infrastructure, skilled manpower, modern financial facilities and social and political stability.

The country has a diversified economy with various strategic sectors, which can play a pivotal role in turning around the economy. These sectors can be broadly classified

as agro-processing, adding value in mining and forestry products, agricultural and construction inputs.

The Government will strive to provide an enabling environment for value addition in all key sectors of the economy. It will continue to explore ways of enhancing tax incentives for value addition in priority areas. Research and development will also be encouraged. Concessional funds will be provided in the focused sub sectors. Policies that encourage investment in new technologies that modernise operations and enhance capacity utilisation will be pursued

Some potential growth areas are as follows:-

v Agro-processing - Foodstuffs

- Textiles and Clothing

- Leather and Leather products

- Wood and Furniture

- Drinks and Tobacco

v Motor Industry

v Metals/Steel Industry

v Electronics

v Pharmaceuticals

v Cement

v Fertilizer

v Jewellery

v Construction

v Agro-Chemicals

These strategic key sectors will benefit from concessionary funding. Under this facility, statutory reserves contributed by financial institutions are made available to commercial and merchant banks for on-lending on a revolving fund.

18.1 Agro-Processing

Given the importance of the agricultural sector in Zimbabwe, agro-industries dominate the manufacturing sector of the country in terms of both output and employment. The sector accounts for approximately 60% of manufacturing value added.

Agro-processing comprises of Foodstuffs, Drinks and Tobacco, Textiles including ginning, Clothing and Footwear, Wood and Furniture and Pulp, Paper, Paper Board and their products.

The sector has a strong base with highly diversified cropping and farming community. Major crops produced include maize, cotton, tobacco and oilseeds. Citrus fruits, mangoes, flowers, apples, among others, constitute the horticultural sector.

Share Of Various Agro-Industrial Groups in Total Agro-Industrial Output and Employment.

Table 1

Product	%Contribution to gross output	%Contribution to employment
Foodstuffs	38	28
Drinks and Tobacco	21	12
Textiles including ginning	20	24
Clothing and Footwear	11,5	20
Wood and Furniture	5	11
Pulp, Paper, Paper board and their products	4.5	5
Total %	100	100

Table1 shows a range of agro-industries in Zimbabwe. Within the agro- industrial sector, foodstuffs are the largest sub-sector contributing about 30% to the total value of agro-industrial products produced in this country.

The agro-industrial sector has expanded in both absolute and relative terms. As a result of the expansion, there was increased processing of a wider range of crop and livestock products which led to a decrease in the imports of final agro-industrial products.

Contribution Of Various Agro-Industrial Groups To Total Manufacturing Output And Employment.

Table 2

Product	%Contribution to output for the whole manufacturing sector.	%Contribution of various agro-industrial groups to manufacturing sector employment.
Foodstuffs	19	16
Drinks and Tobacco	10	7
Textiles including Ginning	11	13
Clothing and Footwear	6	11
Wood and Furniture	2.5	5.5
Pulp, paper,paper board and their products	3	2.6
Total	51.5	55.1

The above table shows that agro-industry contributes about 52% and 55% of total manufacturing output and employment respectively. In addition, foodstuffs contribute about 19'% and 16% to gross manufacturing output and total manufacturing employment respectively.

There are vast untapped investment opportunities in this sector namely, canning, oil pressing, grain milling, fruit and vegetable processing, livestock processing, furniture manufacturing and textiles among many others. This sector should be explored in order to enhance value addition.

18.2 Agricultural Equipment

The Government is committed to make Zimbabwe a major producer of agricultural equipment. This is important to the country since our economy is agro-based. Agricultural equipment is necessary for crop production and harvesting. Companies that produce agricultural equipment will be supported through incentives.

Innovations in agricultural equipment will be supported and encouraged. After the local market is satisfied, producers of agricu

2004-2010

Table of Contents

7.6 Energy : ZESA/WANKIE COLLIERY/NOCZIM

11.12 Participation At International Trade Fairs And Expos

12.1 Spatial Development Initiative (SDI )