Editor's Comment

Low value in raw products

VALUE addition to various products, especially agro products, has the potential to contribute significantly to national development and the creation of employment.
Worldwide countries that have reached the mark of development are those that have exploited value addition to products.

The US, Japan, China, UK and many other developed countries are distinguished by their capacity in manufacturing goods and value addition.

These are countries that import raw materials and export refined products.
This is certainly the major contributing factor to their development status.
This is because value addition makes products more attractive and competitive.
For instance, it has been established that a refined product is 16 times more valuable than the raw one.
It therefore goes without saying, the real benefit of any product comes after value addition.
This is why we support the call by President Lungu for Zambian companies to add value to all local products to earn the country the much needed foreign exchange in line with Government’s diversification programme.
The President rightly noted that the local economy can only record significant growth when companies add value to natural resources.
“The Zambian economy will only grow once there is value addition to all important natural resources. Time has come for Zambia to reduce the export of raw natural resources,” President Lungu said.
True, Zambia will only experience significant development if more companies come on board to add value to various products.
As it is now, Zambia exports more raw materials such as copper, gemstones, cotton, maize and other agro products.
As the head of State has stated, it is now time to reduce the export of raw natural resources.
It is time to add value to guarantee the country’s economic growth and spur wealth and job creation.
In line with the Patriotic Front Government’s vision for diversification, there is need to strengthen our manufacturing and agricultural sectors.
It is time to manufacture goods for both local and foreign consumption as opposed to importing.
For instance, Zambia is a major importer of cars, which makes them extremely expensive for citizens because of Freight and duty obligations.
It is time the private sector ventured into motor assembling.
We are happy that Gonow Zambia Limited, a Chinese brand, is in the process of constructing a US$175 million motor vehicle-assembling plant at the Lusaka South Multi-facility Economic Zone.
It is anticipated that the company will assemble 20 vehicles a day for distribution within the Southern African Development Community (SADC). This is what we need.
As the country looks to agriculture as an alternative economic mainstay away from copper, value addition is certainly the way to go.
Instead of exporting maize, agro firms will do well to add value by making mealie-meal, cornflakes, stock feed and many other finished products. These will definitely earn the country more revenue as compared to maize in its raw form.
Cotton is also among Zambia’s major exports. To derive more value, Zambian companies need to export finished products such as clothing and linen.
It does not make sense to export cotton at a very low price and later on import clothing and other cotton by-products at exorbitant prices – just like it does not make any economic sense to export groundnuts and later on import peanut butter and cooking oil at a price 10 times more.
While Zambia still has a long way to go in terms of value addition to products, we are aware that there are some Zambian companies that have already set themselves on the path.
Trade Kings is one such company. Trade Kings has indeed set a good example that Zambian companies have much more to offer beyond raw materials.
Trade Kings, which manufactures a variety of groceries, is one success story in manufacturing and value addition.
In the mining sector we know of Zamefa, which also is doing a commendable job by adding value to copper.
Zamefa, which produces cables, is also exporting to other countries within the region and beyond.
We also know that at small-scale level, we have entrepreneurs who are adding value to various raw natural resources. For instance, some entrepreneurs are making accessories such as necklaces and bracelets from gemstones.
These need to be supported financially and through skills development.
As companies embrace value addition, it is our hope that they will uphold quality of products and packaging to compete favourably not only locally but internationally as well.

 

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