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INVEST IN PRODUCTION NOT CONSUMPTION

12/07/2022 08:03:00 Sabelo Gabs Nxumalo

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The official opening of the Matsapha Link shopping complex was indeed a great achievement for the African Alliance and its partners.

The business genius of Stofeni Ginindza cannot be denied. You may choose to like or hate him, but his contribution towards the development of the country speaks for itself. I am aware that most money managers generally prefer real estate development as a safe place to invest the monies they manage, but my case today if for manufacturing for the promotion of industrialisation.

Consumer nation

The kingdom, just like many countries in Africa, is a consumer. We tend not to invest much in production, yet we are talking industrialisation at every regional developmental forum including the Southern African Development Community (SADC). The opening of the Matsapha Link is yet another shopping complex designed for consuming products which are not manufactured in Eswatini but South Africa. If you were to take a survey as to how much of the produce we consume through Pick n Pay, Shoprite, Spar and others against how much is manufactured locally, you would be shocked.

We are a consumer nation, and this is serious given that the world has become interlinked through globalisation. This is great if you have something to sell to the world market.
The E4 billion announcement made by Ginindza, towards further development of Manzini and other areas, will most likely go towards more consumption projects. These big well-funded South Africa-based franchises basically kill local businesses. All indications are that they are encroaching into rural towns which were the last hope for emaSwati-owned businesses, given that Asian businesses are many in cities and towns.

Producer nation

We tend to be taken by the glamour and glittery of shopping complexes and not realise that we need to produce to have the money to go shopping and that money can only come through the production of the things we consume. As a small nation, globalisation offered us great opportunities given that we don’t have a large domestic market; the world can be our market. The Republic of China (Taiwan) has vast experience in manufacturing but has not really shared this experience with Eswatini except the textile industry, which is great for employing emaSwati.

Eswatini has had some experience in the production of fridges through Fridge Master. This company grew very fast and was even listed on the Johannesburg Stock Exchange, only to collapse when it became a threat to South African giants like Joshua Doore. These are the experiences we should be building upon as we now have the global market, not just South Africa but Africa and indeed the world. We could manufacture all types of home appliances for the world market. Our relationship with Taiwan must at least attract assembly plants for resale throughout Africa.

Iron ore mine reopening

The opening of the iron ore mine interests me greatly. His Majesty King Sobhuza II wanted to leave some of the iron ore for future generations. This is the future, and it would be a shame not to process the iron ore but again sell it raw. I can just hear someone saying yes, we should get into the car manufacturing industry – and I say NO. No country manufactures all the components of the car locally but buys them internationally; that is globalisation.

Engine block manufacturing

Imagine if the African Alliance were to team up with Mwelase Mining, the iron ore mining company, and invested the E4 billion in a steel making process to produce car components such as engine blocks for the international market. Iron is the most used industrial metal in the world, with steel production being the key driver of global iron ore demand. If we were just to specialise in manufacturing engine blocks for export, Eswatini would create jobs and sell in foreign currency, thus be a producer nation not a consumer nation. The opening of the coal mine would also help in the smelting and processing of the iron ore. We have an aluminum production company next door in Mozambique, which can be used to source raw material for aluminum engine blocks to complete the production line. This is just a random example of a car component that is vital to the multibillion Dollar car industry.

Steel

Steel materials are expected to account for almost 60 per cent of materials used in the production of a typical passenger vehicles by 2025. HSS (Hollow Structural Sections refers to high-strength welded steel tubing used as structural elements in buildings and other structures and a variety of manufactured products), mild steel, and advanced high strength steel sit at the top of the list of materials used in the manufacture of many products including cars.

Home appliances

We need to invest the billions in manufacturing; we need to generate hard currency. Taiwan is the key to our industrialisation and we can’t be the only country in Africa with diplomatic relations and not have a microchip manufacturing company. Taiwan Semiconductor Manufacturing Company is generally considered to be the largest microchip manufacturer in the world. The world relies on Taiwan for its microchips otherwise also known as integrated circuits, or just chips – which power our phones, laptops, cars, watches, refrigerators and more.
Samsung (from South Korean, which was poorer than Zambia in 1965) is a world leader in producing home appliances and electronics with US$208.5 billion revenue. It also happens to be a top refrigerator company that produces various models including energy efficient smart refrigerators.

The 304 stainless is the most expensive typical of grades used by appliance stainless steel handle manufacturers. Eswatini can produce components (like steel handles) and sell them at cheaper rates to Samsung because we can produce in Emalangeni and sell in Dollars. Basically, we have to get into the international market and stop being a consumer nation as we will soon run out of buying power and the shopping malls will have no buyers. Comment septembereswatini@gmail.com.