State Must Process, Sell Own Goods

The Herald
(EDITORIAL)
Government and diamond firm Canadile Miners should be commended for taking the bold decision to invest in the construction of a diamond technology centre to process diamonds in Zimbabwe.

Given that developing countries have been losing trillions of dollars by exporting raw materials, the decision is as refreshing as they come.

President Mugabe has over the years spoken passionately, at local, regional and international forums, about the need for developing countries to benefit fully from the value of their products by selling processed rather than unfinished products.

Value addition also creates more jobs than those generated at the primary level of producing raw materials.

Products that are exported unprocessed are mainly from the agriculture and mining sectors. These include cotton, tobacco, gold, platinum, copper and diamonds.

For as long as developing countries export raw materials they will never get the full value of their efforts, particularly given the skewed nature of trade in favour of the developed world.

These unfair trade arrangements confine developing countries to producing raw materials whose prices inevitably go down for very good scientific reasons.

Ugandan President Yoweri Museveni has also made some very incisive points at various forums on the need for Africa and other developing regions to export finished goods.

He argues that raw materials are easy to produce hence, all countries with similar climatic conditions produce them.

This leads to over production and, therefore, declining prices.

Some of these resources, especially those that are mined, are finite and with time will be exhausted.

It is crucial then for a country to maximise benefits from such resources before they become extinct.

There is also the issue of advancement in science and technology, which might substitute certain raw materials or lower the quantities required to make certain products.

This, therefore, diminishes the use of the raw materials or renders them irrelevant altogether. A good example is copper. Copper was a raw material for telephone wires in the old telecommunications technology.

With new techniques of wireless telecommunications technology, less copper is demanded and its prices continue to fall.

Zambia is among developing countries that had considerable economic prosperity based on copper in the 1960s when copper prices were good. Therefore it is imperative for African economies to integrate to benefit from economies of scale, and to lower the cost of doing business through beneficiation and value-addition to realise high returns on their resources.

President Museveni has described Africa as the de facto donor to the developed world through the export of raw materials, which the West processes and sells at much higher prices.

At last year's smart partnership dialogue summit hosted by Uganda, he cited the example of African coffee producing countries that he said were realising only US$15 billion from the global coffee trade that generates an estimated US$144 billion annually.

In the case of Uganda, the West was buying a kilogramme of coffee beans for US$1 yet were making US$15 for each kilogramme sold after processing, translating to a profit of $14 at the expense of Uganda.

Zimbabwean farmers sell their soya bean crop for about US$200 per tonne yet in South Africa it is processed into soya cake, a stockfeed, which then sells for about US$1 000 a tonne.

These are chilling examples that put into perspective the good vision Government and Canadile have to invest in a multi-million diamond technology centre.