Policy gone wrong: Look East Policy has put the final nail in the coffin for the Zimbabwe textile industry

Trade & Policy

Policy gone wrong: Look East Policy has put the final nail in the coffin for the Zimbabwe textile industry

Zimbabwe in the year 2003 pompously declared its ‘Look East Policy’. This was in reaction to the behaviour they came across from the Western country. Facing a block from the United States by way of the Zimbabwe Democracy and Economic Recovery Act (Zidera) of 2001 and European Union (EU) article 96 of 2002, the Zimbabwe government shifted its economic relations from the West to the East. But Zimbabwe began facing hard hitting consequences owing to this policy shift.

Zimbabwe made a number of severe mistakes while negotiating trade termss with the East, especially China. Zimbabwe, prior to the Look East policy, had a big and thriving textile industry, which at its peak employed over 24 000. Cotton Printers, Merlin, Con Textiles and David Whitehead were some of the leading brands during this time.

Zimbabwe opened up the market to China under the Look East Policy. Considering that China and the Far East nations have advanced production methods and could afford to offer their products at better prices, local textile companies started to face immediate practical challenges. China has continued to benefit with Zimbabwe, allowing them a chance to trade their poor quality exports within the latter’s home market. Allowing the Chinese market to flourish in Zimbabwe indirectly related to diminishing of local factories within the country while more employment was created in the Chinese land.

The downstream effect of the same was felt with an estimated 20 000 employees (83% of the workforce) who used to be employed by textile firms, having lost their jobs in the 12 years this policy has been in place. Production capacity utilisation for the same players in the textile sector has correspondingly declined to below 10%. With secondary markets failing to provide a market for cotton lint, the number of small-scale farmers involved in cotton production has recorded an embarrassing 32% decline over the years to only 170 000 farmers to date.

The epitome of this came when the Cotton Company of Zimbabwe (Cottco) applied for judicial management in November 2014, citing an increasing debt burden of $56 million, poor capacity utilisation and other viability challenges. The story is similar for Cottco’s peers like Cargil and Terrafin.

Look East Policy is a very serious matter indeed and families have suffered and continue to suffer as a result of Zimbabwe’s inability to comprehend the longer run consequences of trade decisions that they made.