THE Employers Confederation of Zimbabwe (Emcoz) held its congress in Victoria Falls last week where the issue of social dialogue came under the spotlight. Deputy business editor Kudzai Kuwaza (KK) caught up with Emcoz president Demos Mbauya (DM) to discuss a number of issues which include his mandate after being re-elected, social dialogue and economic challenges bedevilling the country. Below are excerpts:
KK: As you go into the second year of your term of office what are your objectives?
DM: As you would recall when we got into our first term, our focus was on rebranding Emcoz under the theme “Adjust and Adapt” and the key area of focus for us was social dialogue. We identified social dialogue through the Tripartite Negotiating Forum (TNF) as a key enabler for engagement for business, labour and government not only to resolve socioeconomic challenges but also to have a medium-to-long-term view of how we should do things so that we achieve the objective of the National Development Strategy 1 which is to have an upper-middle-class economy by 2030. As we go into the next term we are going to continue on social dialogue among social partners.
KK: What progress has been made on the TNF platform?
DM: We have started getting some traction at TNF. We would like the momentum to continue and have discipline among social partners particularly the government. When the government has major policy interventions, they must come to the TNF so that whatever policy interventions are put in place to deal with socio-economic issues, there is ownership by all social partners, there is also accountability and there is consensus building. I think that is how we should build our country going forward.
KK: You have held your annual congress. What were the takeaways from it?
DM: I am happy to say that our congress was addressed by other social partners. We had senior government officials, we had the presidents of the Zimbabwe Congress of Trade Unions and Zimbabwe Federation of Trade Unions and captains of industry. The major takeaway was that there is a genuine desire among social partners to continue driving social dialogue and that was the main theme of our congress which was to unlock the social dialogue process. The key takeaway is that we must continue social dialogue. We must continue engaging as social partners. We also had an opportunity to talk about how industry can partner with universities to tap into the innovations that are taking place. As you know most universities have innovation hubs. There are a lot of projects that can be commercialised and drive industrial innovation and productivity. That was a key takeaway as well. The other key takeaway was that as business membership organisations, we need to continue working together. I am talking about the Zimbabwe National Chamber of Commerce, Confederation of Zimbabwe Industries, Bankers Association of Zimbabwe and Chamber of Mines, among others. We think that we need to have one voice and amplify it as we engage with other partners through the TNF.
KK: Government has put in place several policy measures to rein in exchange rate instability and bring about economic stability such as the introduction of gold coins and reviewing the cost of government contracts. In your view how effective are these measures?
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DM: Let us go back to see what was causing currency volatility and what has been driving the depreciation of the Zimbabwe dollar against the US dollar. Based on research from our economists, where we are with inflation is largely because of growth in money supply and one of the key areas that was driving money supply was government contracts around infrastructure which was being financed from the fiscus, so the hyperinflation and the depreciation in the exchange rate is attributable to money supply. So whatever measures the government has put in place to rein in on money supply will definitely reduce the growth in inflation. We have seen some measure of stability so far in terms of depreciation of the Zimbabwe dollar against the US dollar. The rate has been stable for a while. However we would like to implore the government to put in place more sustainable measures. Not paying contractors is not a solution. Some of these contractors have already done the work. I have got one case that we are dealing with in the hospitality sector. Government is the biggest customer as about 75% of their business is generated from there. Government has stopped paying them for services that have already been rendered. We are imploring the government to make a decision quickly around this issue because not paying contractors is not a solution. We are keen to see what the government will do with contractual obligations with these contractors and how they are going to be pricing. Assuming they can put in place a good model around making sure that the prices are acceptable, the contractors are paid on time and we do not continue to have money supply growth as a result of these contracts, we think we can have relative exchange rate stability.
KK: Finance minister Mthuli Ncube has projected that annual inflation will drop to less than 100% by the end of next year. In your view, is this achievable?
DM: You know it’s achievable to the extent that we do the right things not knee-jerk reactions but things that are sustainable. It is one thing to say we are going to take drastic measures to rein in inflation and have the law of unintended consequences. I will give you an example. Putting interest rates at 200% right now in an environment where business is still recovering from the impact of the Covid-19, where there are problems in the supply chain and therefore working capital and at a time where businesses were starting to recapitalise chokes businesses. So on the one hand we are trying to rein in inflation, on the other hand we are now choking businesses and wiping out working capital and at the same time driving down aggregate demand. We need to balance and find more sustainable ways of dealing with inflation but we do appreciate the measures that have been put through by the government to stabilise the exchange rate. Another unintended consequence is the informalisation of the economy. The current regime on dual exchange rate, which is Statutory Instrument 118, is promoting and facilitating business in the informal sector and restricting formal businesses. Formal businesses in Zimbabwe are over regulated. So we are saying as the government puts in place measures to manage inflation and the exchange rate, let us be careful of unintended consequences.
KK: You have also spoken on how statutory instruments are hindering business operations. Could you please expand on this.
DM: What we are saying is that where you have effective social dialogue among social partners, there is no need to ambush each other with statutory instruments. We are imploring our government to say where we are going, business is committed, labour is committed. Let us sit down and have consensus around key issues. The more regulation that you put, the more you push businesses into informality.
KK: You have also called for both labour and business to be part of the Monetary Policy Committee. What is behind this thinking?
DM: That thinking is coming out of a submission made through TNF and the view from both business and labour is that we need the MPC, given its significance in the economy, to reflect the tripartite nature of the social partners so that we also have ownership of the decisions that are coming from there
KK: What has been the impact of the power outages on business operations?
DM: Energy has got a significant impact on business. The continued power cuts we are experiencing are going to affect capacity utilisation and productivity. We need to have a permanent solution around the issue of power. I am aware there was a meeting recently that was called by ZETDC and industry. Power cuts are really affecting productivity and we really need to resolve this.
KK: What is your outlook for 2023?
DM: Our situation in Zimbabwe is always dynamic. We know that 2023 is a silly season because we are going into elections. Sometimes as we go into elections, things tend to happen. Our view, without predicting what is going to happen, is that we are just imploring our other social partner (government) that there is life after elections. So we need to ensure that whatever measures or policies you put in place, there is a need to keep our economy on a sound footing and we do not do anything to destabilise the economy because of elections. So what we are hoping for is that among the political gladiators there is peace and an environment that promotes and encourages business despite the fact that we have elections.