05 Feb THE ECONOMICS AND POLITICS OF THE STEEL INDUSTRY
The ubiquity of politics is never questionable in the steel manufacturing and supplying industry. The distribution lines, credit and supply lines justifies the notion of politics as whom, where and how resources are distributed. We can never run away from the fact that prior to independence of the majority of African countries, the industry was dominated by the privileged industrialists who formed the minority in terms of population representation
In a bid to contextualize the topic, the steel industry in Zimbabwe provides a basis for argument without bias. Research has shown that the influx of the indigenous players became existent in the mid 90s to date. An objective analysis of the industry will show that the major commercial players operating on large economies of scale enjoy a certain degree of monopoly in terms of bargaining power and setting trends for the industry. The coming in of small businesses coupled with the opportunities being offered by the presence of import substitutes is one historical dynamic that has reshaped the industry.
Any miscalculations and acts of reluctance are mere final nails to any entity. Besides the stiffness of the competition in the industry, easy access to import substitutes means that consumers are spoilt of choices. Loyalty from both the side of customers and stakeholders becomes very scarce in an environment like that. What then is left for small players who do not enjoy large economies of scale in terms of production and operational capital? What does it mean for new entrances to the industry?