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Business Editor
THE government should walk the talk in its call for a reduction of commodity and service prices by tackling the major cost drivers which continue to push the cost of production up, industrialists have said.Zimbabwe is regarded as a high cost country compared to its regional neighbours and this affects the competitiveness of local firms and fuels an influx of imports.
Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya has of late been engaging industry to reduce prices in order to enhance local product competitiveness and contain the pressure for increased salaries.
He insists the economy cannot sustain salary increases and urges businesses to review downwards their prices following the introduction of bond coins.
Captains of industry have said while reducing prices was a noble proposition, the government should take the lead by reviewing “restrictive” elements in labour, taxation, trade and tariff regulations.
“What’s needed is enhancing the operational efficiency of companies by attacking the cost drivers first,” Charles Msipa, the president of the Confederation of Zimbabwe Industries (CZI), said.
“We should deal with cost drivers as a matter of urgency to enhance the ease of doing business. If we just reduce prices without addressing these, then companies will shut down.”
Surveys have shown that labour, power, water, finance, transport and trade logistics, tariff and trade taxes as well as information technology, are the key cost drivers of the economy.
“It was input from the private sector that highlighted these bottlenecks – rigid labour laws, infrastructure bottlenecks, high cost and inadequate power and water supply.
“Yes, the bond coins are there but they don’t address the ease of doing business,” Msipa added.
Bulawayo-based economic commentator and Ball Joints manager Ephraim Makara applauded government for freezing salary adjustments saying this will give industry room to expand.
He, however, said government has not done enough in implementing recommended reforms to enhance growth of local industries.
“I agree with Mangudya on the freeze on salary increases because this automatically stops businesses from increasing prices. Yes, prices must fall if we’re to rescuscitate the economy. $1 for a loaf of bread and $50 for a pair of trousers is just too much,”Makara said.
“We’re happy that Delta Beverages for instance, has slashed prices while telecoms have also reduced charges. The problem is that our government only talks and doesn’t implement. The government must take the lead and reduce utility charges for water, power and licence fees.
“Our government is offering services such as passports, birth and identity documents to its citizens at high cost. Those must be addressed.”
A handful of businesses have reduced prices following the introduction of bond coins. The move, coupled with the drop in fuel prices, has set the tone for much anticipated price reductions.
Online Reporter