The once-thriving brick manufacturing industry in Zimbabwe is now a shadow of its former self, with Chinese companies dominating the sector and local manufacturers struggling to survive.
This stark reality was laid bare by Kipson Gundani, Chief Executive Officer of Africa Roundtable, during the National Competitiveness Commission’s Inaugural Competitive Summit held last week in Bulawayo.
Gundani lamented the decline of local brick manufacturers, attributing their struggles to outdated technology, lack of investment, and an uncompetitive macroeconomic environment.
Zimbabwe was once home to three major local brick manufacturers but the industry has seen one company fold, leaving only two struggling players.
These remaining manufacturers are further hamstrung by their inability to operate during the rainy season due to outdated equipment and technologies.
In contrast, over ten Chinese-owned brick manufacturers have entered the market, leveraging advanced technology and efficient production methods to dominate the sector.
While Chinese companies can produce bricks on demand, local manufacturers often require customers to wait up to three months for their orders to be fulfilled.
“Competitiveness presupposes that there is efficiency,” Gundani said during his address on industry and business perspectives on competitiveness.
“For you to be competitive, you have to be efficient. You have to be producing the right product at the least possible price.”
Gundani said local manufacturers are unable to compete due to a lack of investment in retooling and modernisation.
Many are still using equipment from the 1970s and 1980s, a legacy of Zimbabwe’s prolonged economic decline and the absence of productive financing in the market.
Gundani highlighted the financial challenges facing local manufacturers, noting that some require US$5 million to retool and modernise their operations.
However, accessing credit at reasonable interest rates is nearly impossible in Zimbabwe’s current economic climate. With interest rates exceeding 20 percent, borrowing for retooling purposes is simply not viable for most businesses.
“You cannot even get margins in terms of profits that can beat that,” Gundani said. “So it defeats the whole purpose of borrowing in the first place.”
Gundani explained how the technological gap between Chinese and local manufacturers is another critical factor where Chinese companies have invested heavily in advanced manufacturing techniques, allowing them to produce bricks quickly and efficiently.
In contrast, local manufacturers rely on labour-intensive methods that are both slower and more costly,which slow down competitiveness.
“It helps significantly leapfrog and be competitive if we use the right technologies,” Gundani said.
“No local manufacturer at the moment, brick manufacturers, can compete with the Chinese because they are using top-notch technologies. They can produce whilst you are waiting for your bricks. But if you look at the other brick manufacturers, probably, you pay now and wait for three months for those bricks to be delivered.”
According to Gundani, the pricing problem extends beyond the cost of credit while other chief economists like Christopher Mugaga from the Zimbabwe National Chamber of Commerce and Cornelius Dube from the Confederation of Zimbabwe Industries said Zimbabwe’s macroeconomic environment is characterised by high inflation, currency instability, and a lack of confidence in the financial system.
These factors have created a vicious cycle that undermines competitiveness, with Gundani citing how the high cost of transporting goods due to the dilapidated state of the country’s rail network adds another layer of inefficiency.
“It actually costs seven times cheaper to transport goods by rail compared to roads. If you look at the capacity of our NRZ and the lack of investment in that crucial national asset, you discover we are actually incurring more costs in moving goods across the country than we ought to be,” he said.
“This can be resolved by simply having a functional rail system in this country.”
The decline of local brick manufacturers has broader implications for Zimbabwe’s economy.
With local manufacturers struggling to compete, this has led to job losses and a decline in the formal sector, worsening Zimbabwe’s already high levels of unemployment and informalisation. Gundani warned the growth of the informal sector is a symptom of deeper structural issues in the economy.
“Informalisation is on the growth, and there’s no debate about that,” he said.
“What we are also seeing is a tacit agreement by the Treasury to say the informal sector is growing as evidenced by following them through and trying to extract a few dollars through some taxes that the Treasury is introducing.”
However, Gundani argued taxing the informal sector is not a sustainable solution. Instead, he called for a reduction in taxes and a focus on creating an enabling environment for businesses to thrive.
“Cut the cloth, reduce the taxes, allow the private informal sector to grow, and also incentivise those who have the capacity in the informal to form,” he said.
By lowering the tax burden and providing access to formal value chains, the government could encourage informal businesses to formalise and contribute to the economy in a meaningful way.
Gundani’s address at the summit served as a wake-up call for policymakers and industry stakeholders.
“We need to allow the laws of economics to take place,” he said.
“That is, allow the market to function. And you can only intervene when there is failure.”
