HomeBusiness Digest‘Govt must rein in expenditure to achieve stability’

‘Govt must rein in expenditure to achieve stability’

INDUSTRY is currently buffetted by a number of challenges among them a debilitating liquidity crunch, a severe cash shortage, low capacity utilisation and company closures. Zimbabwe Independent business reporter Kudzai Kuwaza (KK) caught up with the Employers’ Confederation of Zimbabwe (Emcoz) president Josephat Kahwema (JK, pictured) to discuss several issues, among them the present currency debate amid growing calls for the country to adopt the South African rand as the base currency.

he Employers’ Confederation of Zimbabwe (Emcoz) president Josephat Kahwema
he Employers’ Confederation of Zimbabwe (Emcoz) president Josephat Kahwema

KK: You recently crafted your strategic plan for the period 2017-2021, can you take us through what the plan entails?

JK: The Emcoz 2017-2021 strategic plan stands on four strategic pillars. These are service, flexibility, representativeness and results. I will flesh them out for you as follows:

To design and develop services that meet membership needs and grow the membership base of Emcoz; to initiate appropriate reforms to align labour and business to the changing business environment and engage key stakeholders in legislative initiatives; to ensure the Zimbabwe employer voice is heard at every relevant national, regional and international business forum or meeting; to develop a structure capable of delivering on the strategy.

KK: How far have you gone in implementing it?

JK: Not very far, as we are only in the second quarter of the first year of a five-year plan. Suffice to say we are on course.

KK: There has been talk of bringing back the Zimbabwe dollar backed by gold reserves. What is your view, as employers, to such an initiative?

JK: From an economic point of view, there would be no problem in the country using a Zimbabwe dollar backed by gold reserves in the central bank, not gold deposits in the ground.

You have to bear in mind, however, that what makes a medium of exchange currency is not its physical form, but the level of trust the market has in it.

The Zimbabwe dollar traumatised the market in 2009 and its return in whatever form at this moment will be resisted until it earns the market’s confidence once again.

KK: Some are urging the country to adopt the rand as a currency. What are your views on this?

JK: It is not the currency we use which will bring monetary stability to Zimbabwe. That will only come when we bring our excessive expenditure under control and balance expenditure to income.

We need to address the reason why there is no money in the formal channels and yet in the streets every other person is a money-changer.

KK: A survey has found that companies are losing between US$20 million and US$40 million a month in production hours due to workers queueing for cash. How serious is the cash shortage problem for industry?

JK: The cash shortage problem is very serious. The country is using virtual money for internal transactions, but the problems come when external payments have to be honoured as the hard money is not there.

Statutory Instrument 64 of 2016 prohibits the import of certain basic commodities to protect local manufacturers who then find they cannot manufacture because payments to external suppliers take months to be effected.

KK: How is industry coping with the current liquidity crisis and how has this affected trade and retooling?

JK: No research has been done into this and it would be wrong to speculate.
The Confederation of Zimbabwe Industries in their annual State of the Manufacturing Sector Report for 2016 show an increase of almost 14% in capacity utilisation in the period 2015/16.

On the other hand, official figures from the Retrenchment Board show that more than 800 workers from the formal sector were retrenched in the first quarter of 2017.

We need a study into the liquidity crisis to be able to reconcile these contradictions and answer your question comprehensively.

KK: You have been in talks to amend the Labour Act. Has any progress been made?

JK: Yes, indeed there has been progress:

The government commissioned a labour lawyer to come up with a zero draft of the Labour Amendment Bill informed by the 13 principles agreed to at the Tripartite Negotiating Forum (TNF).

This zero draft was interrogated by both business and labour who made their comments to Government.

The comments have been incorporated, where possible, in a revised zero draft which, together with the comments from the social partners, will now be submitted to the Attorney-General for the production of the House Bill which will be further interrogated by the social partners as it goes through parliament.

KK: How difficult has it become to import essential products for your operations as industry?

JK: It is serious enough for both the CZI and the Zimbabwe National Chamber of Commerce, to have approached the Minister of Industry and Commerce about it.

KK: Government has put in place measures to improve the ease of doing business. Are you happy with the progress made so far in this regard?

JK: Yes, indeed we are happy with the progress made in improving the ease of doing business in Zimbabwe.

We point out, however, that this has not resulted in the improvement in investment inflows and competitiveness rankings that we would have expected because the fundamental problem in this country is policy inconsistency which loses us the trust of investors.

In association with the International Labour Organisation, Emcoz is proposing that the social partners work on an Enabling Environment for Sustainable Enterprises, which tackles the issues of engendering trust through policies with tripartite buy-in.

KK: How effective has the TNF been for industry?

JK: The TNF has been a useful forum for letting off steam.

It will, however, only become effective when it has the capacity to implement its decisions. This is not likely to be happening in the short to medium-term.

KK: Government has announced plans to introduce the National Health Insurance Scheme. What are your views on this as industry?

JK: We are very happy that government is now talking about introducing a voluntary National Health Insurance Scheme which will not involve any cost increases for current contributors.

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