Zim businessman warns of pitfalls of local content policies

African countries need to be

careful not to throw out the

baby with the bath water when

introducing local beneficiation

and content policies, Dr Nigel

Chanakira, non–executive

chairman of the Zimbabwe

Investment Authority (ZIA),

told delegates at a business

seminar in Cape Town

recently.

Chanakira said this did not

undermine the validity or need

for local content, but simply

meant that policy should be

aimed at creating enabling

environments for both

local players and would-be

international investors.

“Our policies need to be

well thought out to create the

local impact while at the same

time creating an environment

to attract investors,” he said.

“We must continuously seek

a balance between strong

regulation and encouraging

investment – thus securing the

best possible outcome for all.”

Chanakira, who has worked

throughout his career as

a banker and chairman of

the ZIA to change negative

perceptions about Zimbabwe,

said implementing a blanket

regulation calling for a large

percentage of local

procurement was

not necessarily

going to

deliver the

solution.

“Local

suppliers are

not always

able to provide

competitive prices

or deliver the goods

on time – and sometimes the

goods are shoddy. How can

one in these circumstances

force companies to procure

only locally when it is clearly

making them uncompetitive

in the international market,”

he said. “Often it is also not

just the multinationals that

complain about these high

levels of local procurement

and the challenges that are

experienced; governments

themselves have to procure

locally. We have to strike a

balance.”

His comments come

ahead of a new policy set

to be introduced by the

Zimbabwean government later

this year that is being referred

to as the “local content

policy” – a policy that many

say will add another burden

on imports in an effort to

promote local content.

The policy will offer major

incentives to industries that use

locally procured materials for

their products.

According to Chanakira it is

important when

introducing heavy

local content

policies that

one is also not

burdening local

suppliers with

tasks they are

not capable of

completing.

“There is no

denying that local

content can add real value to

industries on our continent,”

he said. “There are countries

that are very strict about it

like Angola and Nigeria. In

comparison to them Zimbabwe

is more moderate and we are

still tinkering with the policy.

It is important that we deliver

a policy that essentially adds

value.”