tawandamusarurwa
Editor’s Brief
Victoria Ruzvidzo
It has generally stepped to the plate and responded positively to Government policy and has partnered it in more ways than one.
Well, except for occasions when some businesses have dabbled in parallel market activities and demonstrated tendencies to profiteer. Very harmful habits indeed. But at the end of it all, sanity has prevailed. In Government, truant businesses have met their match and have largely been left licking their wounds.
But overall, we have seen a number of projects being implemented, creating significant employment opportunities, running into thousands of jobs. Many businesses have remained steadfast in their operations, even under challenging circumstances. They have not lost heart but have played their part, with some even expanding their operations when the logical decision to make would have been downsizing.
Most have kept their faith in the economy and its future prospects. This is highly commendable and indeed laudable. It has not been entirely smooth, though, and not every business or operator has been loyal to the economy but business has been happening. Interactions with company executives have largely been progressive, with many pledging to do their bit to develop this economy.
Company results released this season, particularly in this past week, show that all this has not been in vain. Many firms have released positive results that show a good income statement and a healthy balance sheet, with prospects of an even brighter future.
So, it is in this regard that, as the country enters a new season after the harmonised elections, the private sector will demonstrate renewed energy and play its part in achieving set goals. The national aspiration is to achieve a 5,3 percent economic growth figure this year and at least 5 percent annually over the next few years.
A lot depends on how the private sector will respond or is responding to Government policies and other factors that determine the pace at which the economy can grow. These are not small figures, they will require a more determined and intentional stance by the private sector, nothing short of rolling up sleeves and literally putting on factory shoes.
We expect business to play ball and go with the flow, as Government creates an enabling environment. In fact, it is also the responsibility of business to create a favourable environment as it advises Government, while also playing its part to achieve the desired outcomes.
The instances referred to earlier, where the two partners have played cat-and-mouse games, particularly on the foreign currency market and attendant price instability, should be kept where they belong — in the past. We have all experienced the ugly side of any such selfish moves and would, thus, not expect business to shoot itself in the foot. There is no need to create future problems that will come to haunt us all just to quench today’s selfish desires.
There is no need for either party to engage in activities to outsmart one another. It does not work. It is always the economy that then suffers. Dialogue is always critical, where clarifications and appeals need to be made or heard. Government has largely maintained an open-door policy and President Mnangagwa has even gone to the extent of creating an advisory council to discuss and thrash out any sore points.
Meetings have been held involving business, the Presidium and relevant ministries. Such foundational commitment by the Second Republic needs to be consolidated in this new era, which presents a beckoning opportunity to take relations to a whole new level between the two parties.
In his Mid-term Monetary Policy Statement early this month, Reserve Bank of Zimbabwe Governor Dr John Mangudya said he is upbeat since the economy is on a sound footing. Stakeholders need to adopt a stance to sustain the trajectory.
The strong macroeconomic fundamentals obtaining in the economy suggest that the exchange rate instability witnessed between May and June 2023 was not a result of monetary factors but a reflection of adverse behavioural factors and insatiable demand for foreign currency by economic agents.
The measures instituted by the bank, which include further liberalisation of the exchange rate, a tighter monetary policy and the introduction of gold coins and gold-backed digital tokens are bearing fruit as evidenced by the current firming and relatively stable exchange rate dynamics.
The ongoing intervention in the foreign exchange market through the wholesale auction system is exerting a dual effect of mopping up excess liquidity and re-establishing the optimal mix of the dual currencies, thus sustaining the current exchange rate and price stability.
As a result of the adroit policy measures, the country witnessed a significant correction in the exchange rate. The correction in the exchange rate has led to a concomitant correction in prices.
The bank remains confident that the continued sale of gold coins and gold-backed digital tokens will sustainably take away steam from the store-of-value demand for the local currency during the short to medium term, with positive spinoffs on the substance of the obtaining price and exchange rate stability.
Furthermore, the bank’s strategic resolve for continued monetary prudence will add further impetus to the positive prospects of the local currency over the medium term. In addition, the ongoing monitoring and surveillance by the Financial Intelligence Unit (FIU) will effectively minimise incidences of exchange rate manipulation and abnormal pricing practices.
More importantly, the robust macroeconomic fundamentals, as attested by a healthy balance of payments, fiscal sustainability, higher manufacturing sector capacity utilisation, improved foreign currency receipts relative to foreign payments and continued monetary restraint will anchor the obtaining price and exchange rate stability in the medium to long term. In this context, the bank strongly believes that the current stability is sustainable in the medium to long term.
While all stakeholders must come to the party for the economy to function optimally, in this instance, I decided to zero in on business as a major driver of growth.
It would be critical to highlight some of the key functions of the private sector, also as a reminder to some firms that appear to have forgotten why they are in existence.
Indeed, in an economy like ours, business drives economic growth, creates employment opportunities, assists the community through corporate social responsibility (CSR) initiatives and other responsibilities.
Job creation
Private businesses generate employment opportunities and reduce unemployment rates, while improving the standard of living. This also happens as they expand their operations, hence increase direct and indirect job opportunities. This fosters inclusivity as well. Women and youths are increasingly benefitting from these initiatives. We have major investments such as Manhize and Prospect Lithium Zimbabwe that have created thousands of jobs in recent months.
Investment and capital formation
Typically, the private sector is the primary source of investment and capital formation in the economy. Business, with assistance from banks and other financiers, invest in new ventures and expand existing operations. They also introduce innovative technologies and production methods, investments that foster economic growth and engender overall economic development.
Tax revenue
Businesses generate tax revenue for Government through corporate tax, property tax, import and export duties and other such taxes that finance Treasury disbursement. From these revenues, Government can then invest in infrastructure development such as roads, dams, irrigation schemes, borehole drilling and other such initiatives that result in improved livelihoods for the citizenry.
Innovative and technological advancements in the age of technology
It is the private sector that ensures the country adopts new and advanced technologies through research and development initiatives. This results in more efficient operational systems, and new product development.
The new technology also promotes increased levels of productivity, competitiveness and economic diversification.
Market competition and efficiency
A vibrant private sector promotes competition, leading to increased efficiency and improved quality of goods and services.
Competition does incentivise firms to innovate, offer competitive prices and deliver better products to consumers. This gives customers a wider base to choose from.
Export and trade
Businesses play a critical role of promoting foreign currency earnings and reducing trade imbalances as they produce for the export markets. Participation in global trade gives firms access to international markets, attracts foreign investment and enhances economic integration with other economies.
Corporate social responsibility
Most businesses engage in CSR initiatives such as building clinics, hospitals, schools and other facilities. Such moves will address social and environmental challenges. This contributes to inclusive and sustainable development.
These and more roles of the private sector are critical in growing the economy. Already, a number of new investments, particularly in the mining sector, are on the ground.
Only three days ago, President Mnangagwa commissioned the Sabi Star, which will promote the value addition of lithium, resulting in increased earnings.
The surrounding community will also immensely benefit from these operations, among other benefits set to accrue from the investment.
New targets have been set in mining and agriculture from achieving a US$12 billion and US$8,2 billion, respectively, due to high performances that have exceeded operations. Other sectors that include tourism are also scoring high in terms of receipts and arrivals.
The economy is indeed headed for the stratosphere and demands that Government, business and other stakeholders hold hands and move in sync to realise the great potential for growth that exists.
In God I Trust!
Twitter handle: @VictoriaRuzvid2; Email: [email protected]; [email protected]; WhatsApp number: 0772 129 972.
Online Reporter