59. The policies and institutional framework outlined above were meant to influence directly the development of infrastructure, human resources, transformation of natural resources into processed and final products, technological innovations and upgrading and domestic and foreign investment. In addition, in the 1980s the government introduced new incentives for exporters. The Export Incentive Scheme, where exporters were paid 9 per cent of fob value of exports (in Zimbabwe currency), was introduced in the early 1980s. This was followed in 1983 by the Export Revolving Fund (ERF), which allowed exporters to have access in advance to forex needed to purchase the imported inputs required to manufacture goods for specific export orders (the ERF was scrapped in 1993 but had been targeted at the manufacturing sector; the Export Promotion Programme (EPP), introduced subsequently, catered for the mining and agricultural sectors. The Industrial Bonus Scheme allowed for a supplementary foreign currency allocation to be made on the basis of incremental exports achieved.
12 For details on the structural features of the macro-economic policy framework of the post-independence period, see D.B. Ndlela,
(1990), op. cit.
13 The designations of the ministries have changed over time but the functions have remained more or less the same. For example, the earlier separate Ministries of Industry and Technology and Trade and Commerce have now merged into one and Planning has been hived off from Finance and has become the National Economic Planning Commission.
ECA/MRAG/95/10/MR Page 29 60. Towards the end of the 1980s, it had become apparent that the macro-economic policies in place, and especially the controls inherited at independence had failed to expand the economic activity as had been envisaged at the beginning of independence. Without being in a situation of economic crisis in which the World Bank/International Monetary Fund can determine the main lines of policy, the GOZ itself decided to embark on a comprehensive structural adjustment programme, of which trade liberalization constitutes a central part.
However, the Government's decision does not seem to have been directly related to efficiency considerations, but was motivated by the political threat from a rapidly growing number of unemployed, many with a relatively high level of eduction, and the consequent desire to move the economy from a lack-lustre 3 per cent per annum GDP growth rate to at least 5 per cent per annum, and a much higher rate of job creation than was achieved in the 1980s. The intention of the Economic Structural Adjustment Programme (ESAP) was to move towards a more open economy, forcing industries which had grown up under sanctions to
face international competition and become more export-oriented.
61. Without going into details on the efficacy or otherwise of the ESAP and/or its success or failures, the success of the programme in transforming the raw materials into finished goods would largely depend on Zimbabwe firms' internal capacities which relate to skill, entrepreneurial capabilities, flexibility and adaptability. Unlike the earlier periods when industries were protected, under an open economy, all subsectors contain both winners and losers, depending on the "foundation" of the country's comparative advantage, the composition and abundance of factors of production, the potentials for enhancing production skills, the institutional setting and the level and response of the physical and financial
infrastructure.14
62. The successful transformation of a country's natural endowment into industrial products depends on the historical understanding of how the static comparative advantage was or is consistently turned into dynamic comparative advantage. In the Zimbabwean case, at any given time, the sum of static comparative advantage consists of given factors of production, i.e. physical capital, labour, human resources, land and its natural resources. As shown above, over time and in the three distinctive historical periods, these have been undergoing transformation which therefore can be analyzed in the context of dynamic comparative advantage, ie. associated with upgrading of skills, innovative capabilities, entry of new firms, the emergence of technological systems or networks where both Government and enterprise act to support production and know-how.
14 See P. Braunerhjelm, and G. Fors. The Zimbabwean Manufacturing Sector: Current Status and Future Development Potential. Report Prepared for tbi Confederation of Zimbabwe Industries (CZI), Stockholm, January, 1995, Chapter 2.
ECA/MRAG/95/10/MR Page 30
Box 1
Successful tranfofmation of local natural raw materials into finished goods in Zimbabwe
Zimbabwe's industrialization has historically been inextricably linked to the country's vast natural resource base, particularly its mineral and agricultural sectors. Of the four sectors in the raw materials sphere of production, the manufacturing sector has averaged nearly 24% of GOP from 1988 to 1994, far outstripping the next largest sector, agriculture with 12%; mining 7%;
electricity and water 3% and construction 1.4%
During the three periods that characterize Zimbabwe's history ie, :(11 pre-Unilateral Declaration of Independence period (UDI) from the 1930s to 1963; (2) the UDI period from 1965 to 1979;
and (3) the post independence period from 1980 to date, the manufacturing sector was developed by the minority white establishment and has been substantially expanded bv the current black government, with the volume of production of the manufacturing industries increasing from a 1980 base of 100 to 112.2 in 1985.
Zimbabwe's manufacturing sector is not concentrated in the capital Harare, but is geographically distributed all over the country based on the natural resources of the particular area, thus
encouraging balanced development. Thus the gross output of the manufacturing industries in 1992 placed Hairier with 410,652 million; Bulawayo with $4,166; Kwele and Redcliff with
$1,910, closely followed by Gweru, Mutere, Kadoma and Masvingo with $1,144, $924, $422 and $175 respectively.
Human cababtttv development and inculcation of industrial culture. . (a) Government actions.
The Government of Zimbabwe embarked on a human resource development programme to close the gap in technical stalls between the minority whites and the majority blacks. The main plank of these policies was the massive expansion in the educational system at the primary,
secondary and tertiary levels. In-service training by firms was promoted through the Zimbabwe Manpower Development Fund (ZIMDEF). Formal sector enterprises were required to pay a 1%
levy with a view to re-imbursing enterprises that had provided approved in-house training programmes. The labor code was revised to give government the powers to intervene in the wage and employment conditions of black workers.
Education expenditure has steadily increased. In 1977 the government spent 2.5% of the GNP on education at ali levels. This figure increased to 6.6% of the GNP in 1986. Primary and secondary education took the lion's share of the budget, resulting in Z$574.299r0Q0 during the
1985/1986 school year and increasing to Z$ 1,042,543,000 during the 1989/1990 school year.
University education was allotted Z$39,718.000 during the 1985/1986 academic year and increased to Z$82,208,000 during the 1989/1990 academic year. In 1990 there were 1520 secondary schools in the country, up from 200 in 1980. Enrolment figures stood at 708,100 students in 1990 as opposed to 74,300 in 1980. About 33% of enrolled students ware woman during the two periods referred to above. In 1989, 9,288 students were enroHed in the
University of Zimbabwe, up from 2,240 in 1980. The enrolment in the faculty of engineering was 389 in 1987 and increased to 693 in 1990. The enrolment in the technical colleges rose from 3,469 in 1980 to 9,600 in 198S and reached a high of 16,500 in 1987.
(b) Private sector participation.
Several organizations in Zimbabwe have embarked upon industrial skills training programmes that aim at not only providing skills to their employees but also imparting in them an industrial culture. The Zimbabwe National Chamber of Commerce (ZNCC) and the Bindura Nickel
Corporation Ltd., a subsidiary of Anglo-American group of companies are two of several
organizations that have embarked on such programmes. In the case of the ZNCC, this has been accomplished by the setting up Junior Chambers of Commerce at the secondary school level
ECA/MRAG/95/10/MR
Page 31
will enable them to be more focused. Anglo-America on its part, identifies the potential
employees in secondary schools, follows their progress through university, provides those who arft selected to work with the company two years of pupilage in good engineering and
management practices and through a process of continuous assessment of their skats, employees who have proven themselves are rapidly placed in positions of responsibility.
Physical irifia&lructmal capacities
Zimbabwe has several welt functioning physical and institutional infrastructures that support the transformation of natural resources into finished goods. These include: adequate energy,
functioning telecommunications, transport, improved roads, rait and air links. The concept of rehabilitation is not wide-spread in Zimbabwe. This is because the country manufactures spare parts for almost every equipment that is used internally. The buses used for country-wide transportation, railway wagons and heavy duty trucks are manufactured in Zimbabwe, using local materials, tt is important to note that the physical infrastructure Inherited from the previous regimes ere welt maintained and have been expanded. Indeed 1% of the GNP has been sat aside for upkeep and maintenance of the road network
Finance mobilization capacities
Zimbabwe has several financial institutions that support the private and public sector, but in the recent past, support to the smalt-scale indigenous industries has been much less. To redress this situation, the Government of Zimbabwe has created the Small Enterprise
Development Corporation (SEDCO) and the Crecfit Guarantee Company (CGC), owned fointiy by the commercial banks and the Reserve Bank. Commercial banks have also set up small business units that underpin the financing of SSEs/SSIs. SEDCO sponsors projects from Z$ 10,000 to Z$ 100,000. Another financial institution that lends support to industries from Z$ 100,000 and above, is the Zimbabwe Development Bank (ZDB), which is partly owned by the government with a mandate to mobilize financial resources on a sustained basis. By 1984 the share-holders in the bank were the government Reserve Bank, the African Development Bank, and the
European Industrial Bank among others. The ZDB can finance any viable project in any sector such as manufacturing tnd transportation. As part of the Economic Reform Programme, more banks wil be allowed to operate in Zimbabwe and this is likely to open up competition.
ECA/MRAG/95/10/MR Page 32
IV. PROGRAMME OF ACTION FOR DEVELOPING HUMAN, INSTITUTIONAL AND FINANCIAL CAPABILITIES FOR TRANSFORMING NATURAL RESOURCES INTO SEMI OR FINISHED GOODS
A. Overview of technological skills mastery.
63. The dramatic rise in the cost of acquiring technology and other forms of know-how from developed countries has not gone unnoticed by developing countries. Indeed it has been recognized that the rise can be moderated by the acquisition and timely updating of appropriate skills by the developing countries.
64. Two contradicting factors have forced developing countries to try new ways to best utilize and rapidly master the technology that they import:
(a) Firstly, their realization that their powerlessness to regulate the flow of technology owed much to their gullibility for having accepted the falsehood (i) that technology was non-defined and too complicated an object of commercial transactions whose trade could not lend itself to international regulations; (ii) and that any attempt on their part to regulate its cost would only result in exacerbating the technology sellers' willingness to conclude agreements with buyers in what they (the buyers) consider as
small, uncertain and underdeveloped markets.15
(b) Secondly, their unavoidable confrontation with the changing world economic order characterized by the globalization of technology championed by the huge transnational corporations, that only a few years ago were not too enthusiastic to sell technology
to the developing countries.
65. The developing countries of Africa strive, therefore, to attain the highest possible level of technological self-sufficiency within the boundaries of their limited resources. In other words, their desired objective is to master the industrialization process, a mastery that embodies the creation and development of viable industrial organizations and the training of the competent personnel needed in the process.
66. The choice of the type of technology that is to be imported and the rapidity of the industrialization process are factors that are determined by political considerations. Once the decisions to acquire the technology have been made, however, the challenge to the country becomes that of minimizing the cost of such an acquisition. The contention in this chapter of the paper is that if locally trained personel were available, this could be utilized to bring about the reduction of the high cost of acquiring technology, thus accelerating the process of industrialization..
67. Among the main stages that pave the way towards the mastery of industrialization, the following eight competence levels may be regarded as the primary yardsticks:
15 E.A. Tia£ha, "Technicaf Education as a Factor Moderating the High Cost of Technology Transfer". Paper presented at the International Organization of Science and Technology Education. Brisbane, Australia, August 1986.
ECA/MRAG/95/10/MR Page 33 (a) Operating a machine;
(b) Maintaining it;
(c) Repairing it;
(d) Renovating (including the marking of its spare parts);
(e) Adapting an existing machine, product or process to new conditions;
(f) Improving it;
(g) Designing a new product or process;
(h) Introducing new technology.16
68. Technological self-sufficiency is said to have been achieved when the last two stages above have been reached. Because of the constraint of limited financial resources in developing countries, however, mastery of the industrialization process will come about only with the use of appropriate indigenous personnel at the above competence levels. So far, since they lack an adequate supply of competent personnel to occupy the higher strata of the mastery process that characterizes technological self-sufficiency, their traditional solution has been to rely on the importation of "high- level" personnel together with the acquired technology. This established in effect a system with the 'negentropic' self-perpetuating tendencies that characterize most systems. Such a solution is becoming more and more undesirable in the face of growing evidence that the imported "high level" personnel is too expensive, all the more so since these expatriates ultimately do not have the interests of their host countries at heart.
B. Some possible pathways to acquiring technological skills
69. The training of indigenous personnel has been gaining more attention as a solution for moderating the cost of the experts who generally bring high technology to developing countries. Carefully thoughtout training programmes ensure that indigenous experts participate in the complete project design and implementation, the planning process, contracts negotiations etc. Also, the social status of local industrial and technological human resources needs be upgraded. The orientation of these programmes should be closely linked to the needs of existing industries and to future industrial plans. They should provide labour in the areas of: (a) design and industrial leadership to conceive and monitor programmes as well as negotiate technology transfer agreements; (b) training of technicians to construct and operate plants, repair and maintain equipment, appraise and select technological projects.
70. Unfortunately, studies show that in developing countries, the training aspect of industrial projects is generally tackled on an ad-hoc basis, whereas the training of personnel to run the projects should be well thought out and planned from the time the projects are conceived. The links between educational systems and employment possibilities are not often well established. There are few training institutions that match the needs of the countries to those of their instructional programmes.
16 UNIDO: First Consultation on the training of industrial manpower: Stuttgart, Federal Republic of Germany (22 - 26 November, 1982). page 17.
ECA/MRAG/95/10/MR Page 34
71. In an exhaustive study carried out by UNECA17, African countries were divided into three categories when judged by the level of development of their S&T policy making bodies and policies. In the first category, the S&T policy main bodies are functioning adequately and have forged ahead to establish linkages between several operators to make collective decision on their national technology policies. Countries included in this group are Algeria, Cameroon, Congo, Cote d'lvoire, Egypt, Ghana, Kenya, Morocco, Nigeria, Senegal and Tunisia. Some of these countries are naturally ahead of others and hence the levels of
achievement are variable.72. In the second category, are countries which have a fairly stable S&T policy body but while in some of them the policy instruments have not been completely formulated and operationalised, in others the ministerial mandates require further strengthening of the functions anticipated of them. Generally, because of these two reasons the performance of the S&T bodies in this group is marginalised. Countries in this group include Benin, Burkina
Faso, Ethiopia, Gabon, Niger, Sudan, Tanzania and Togo and Zimbabwe.
73. To shed more light on the development of industrial skills especially those that are used in transforming natural resources into finished goods, an analysis of skills development
in Zimbabwe is presented in the following section.C. Human capacities for transforming natural resources in Zimbabwe
1- Historical context74. Technological skills acquisition and development in Zimbabwe might better be understood if situated in the context of the three widely agreed periods mentioned earlier that
characterize Zimbabwe's history:1. Pre-Unilateral Declaration of Independence (UDI) period i.e. 1930s to 1965;
2. Unilateral Declaration of Independence period (1965 to 1979; and
3. Post-independence period (1980 to the present).2- The acquisition and development of technical skills during the Pre-Unilateral
Declaration of Independence (UDI) period
75. During the pre-UDI period, attention was paid to agriculture, mining, manufacturing and health sectors. However, these sectors depended on imported white skills and foreign
capital resulting in 80 per cent of the skilled craftsmen between 1973 and 1974, while the local apprenticeship supplied 20 per cent of the industrial work force. It is not ciear what percentage of this local component was black. What is clear though, is that this policy did17 Technical publication on: Wavs and means of developing appropriate industrial technology ?"*? >i»mffn resources through co-operative arrangements between universities.
industrial research and development institutions and
enterprises in african countries.
ECA/IHSD/INS/004/91. SEPTEMBER 1991. UNITED NATIONS ECONOMIC COMMISSION FOR AFRICA
ECA/MRAG/95/10/MR Page 35 not result in the creation of local industrial skills. Indeed, between 1965 and 1975 immigration professionals, technical and related workers exceeded, on an average, 1,200 per