Zim’s economic recovery stalls

ZIMBABWE’S economic recovery has stagnated and needs major policy measures to move the country forward, the president of the Confederation of Zimbabwe Industries (CZI), Joseph Kanyekanye has said.
Capacity utilisation increased from an average 10% in 2008 to an average 32, 3% last year but it has stagnated between 20% and 40%, Kanyekanye said.

He said while there was an element of stabilisation, following the adoption of multiple currencies last year, there was a threat of stagnation or even a reversal of the gains realised so far “if some significant growth enablers such as power are not addressed urgently”.

“Day to day operations of business have largely stabilised and some few businesses are reporting improved capacity utilisation especially those who are dynamic or have foreign investors,” said Kanyekanye. “The major constraint is the absence of money to fund both recurrent and capital expenditure. The few lines of credit available are expensive to sufficiently address this problem.”

As such, Zimbabwe has to realign policies and posture to deal with a crippling national debt and perceived risk profile in order to attract funding and foreign direct investment.

“We should realise that until the reported returns from our Marange diamonds can be channeled to economic recovery, we will need foreign funding for our economic recovery,” said Kanyekanye. “A lot of service oriented companies have no business, but their rates are too high. Quasi-government institutions responsible for these utilities ought to be realigned to render service at acceptable rates to customers.”
These quasi-governmental institutions have to go through a painful adjustment in their internal systems and this includes the unsustainable wage and salary bills which can cause an unintended inflation spiral.

He added that industry had made submissions requesting additional power for at least 18 hours during weekdays as a way of boosting production. Some industries went for as much as three days without electricity, added the CZI chief.

Kanyekanye said they had participated in the formulation of the Mid-Term Fiscal Policy review and their thesis was that it should be premised on mobilisation of internal resources than relying on external funding as the country was let down last year.

The Short-Term Emergence Recovery Programme, the first economic policy document last year, had anticipated a lot of donor support which never materialised, leaving the country in a deficit.

Kanyekanye, however, said policy makers should not adopt policies which would upset the current
route to recovery, citing the case of Indigenisation and Economic Regulations which “brought confusion in the country.”

“This (Indigenisation Regulation) did a lot of harm to monies which were coming into the country via the stock exchange,” said Kanyekanye. “This has dried up and is cause for concern.”
He said industry wants the empowerment policy implemented in a manner that is friendly to business and that does not cause alarm.
Industry, Kanyekanye said, was not against broad-based black economic empowerment but the manner in which it was done.

“Suffice it to say that industry is not the enemy of government but rather we complement each other and above everything else we want this country to succeed,”  he added . “We hope and trust that the authorities will take our considered advice to work policies in the context of government clusters and ensure henceforth that any policy initiatives must be cluster consistent within government itself and perhaps incorporate views from industry.”

CZI said they had always had an eager ear from the Finance Ministry and their recommendations had been included in major policy documents after the inauguration of the Government of National Unity.
“Consultations between government and business should ideally be used to bridge differences rather than to consolidate them in the odd situation where they do occur,” said the CZI president.

Kanyekanye added that most companies needed to be recapitalized, a challenge given the prevailing liquidity crunch.

 

Leonard Makombe

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