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High electricity charges topped the list of 17 factors that the Confederation of Zimbabwe Industries cited as negatively impacting on doing business in the country.
While the country continues to face unending power shortages resulting in load shedding which is depressing productivity in critical economic sectors, the CZI said the price of electricity was also a top disincentive for doing business.
“The following factors are seen as having the greatest negative impact on doing business in Zimbabwe, electricity charges, ageing equipment, corruption and low domestic demand,” the CZI said, after getting the opinions from representatives of 250 companies.
Challenges to do with old equipment, which made the local industry uncompetitive, and low domestic demand as low salaries impact on the public buying power were also impacting on the sector.
Failure to invest in new equipment has been compounded by the fact that it is increasingly difficult for companies to access finance from local financial institutions, the study revealed.
But power utility Zesa Holdings contends that its tariffs remain competitive and has instead appealed to industry to shift its operating timetables to the evenings, when there is less demand for power.
Other factors which were cited as negatively affecting doing business in the country included corruption, policy instability, lack of access to financing and high interest rates, public sector bureaucracy, labour and competition from imports.
The study revealed that increasing labour costs continued to impact negatively on business.
“A total of 77 percent of the respondents indicated that their wage bill had increased in 2013 compared to 2012, with the major reason cited being wage negotiations and staff recruitment,” the CZI said.
The Government has since indicated its mission to address the challenges to stimulate growth. Industry and Commerce Minister Mike Bimha warned that some of the measures would be against commitment to regional agreements on promoting trade.
“Some of the measures we will take will raise discomfort with our regional trading partners in terms of our obligations to tariff reductions,” he said, hinting at a possible hike in tariffs for imports.
Minister Bimha, however, said the Government was obliged to promote the health of its citizens and industry.
Earlier, Finance Minister Patrick Chinamasa also warned that the Government was moving to address issues such as dumping of cheap imports which were choking revival of critical sectors, particularly textiles and clothing.
According to the CZI, capacity utilisation in the local manufacturing industry slumped to 39,6 percent in 2013 from 44 percent last year as the economic environment remained hostile for recovery. — New Ziana.
Online Reporter