It is great that the government sees industrialisation as “part of the necessary interventions to grow our economy.” This is according to statements attributed by the media to persons in the Ministry of Finance in relation to the Budget Framework Paper for 2019/2020. Accordingly, the government will “build six fruit factories” in different parts of the country.
I expect that feasibility studies have been conducted and confirmed the technical and economic viability of the intended interventions.
However, what is worrying me is the statement I read in the story to the effect that “We have decided that where private individuals are not forthcoming, government must go in”.
I would like to caution thus: where private individuals are not forthcoming, we need to first establish the reasons why. We should not simply “go in” regardless.
Fruit processing is not technologically very challenging and so the private sector money should readily “come in” before government intervention as it has done in sectors such as construction, telecommunications, education, health, hotels and restaurants, among others. Usually, when private individuals are reluctant to invest in a sector, it is most likely because doing so makes no business sense to them.
A few years ago, a potential Asian investor was persuaded (by government connected people) to consider investing in mango fruit processing in this country. He sent one of his sons for a-month-long exploratory visit as a preliminary to a possible investment decision.
The young man returned home and after some time with no development, the government-connected-people asked the Asian about his next move. The response was stunning.
“Sorry, much as we would have liked to invest in mango fruit processing, your country simply does not have enough mangoes to sustain a factory operation”.
Now I do not want to be a killjoy, but if just five years ago, a private individual determined that there were not enough mangoes to sustain one factory, I can only imagine what he would say about establishing six such factories.
Happy new year.