adminBusiness Correspondent
CONFEDERATION of Zimbabwe Industries has put weight behind the notion of internal devaluation being debated in a bid to restore internal competiveness, Post Business has learnt. Internal devaluation is an economic option whose aim is to restore the international competitiveness of a country mainly by reducing its labour costs, either wages or the indirect costs of employers.
CZI national president Mr Busisa Moyo, on his business roundtable in Mutare last Friday, said the country’s cost evaluation was too high compared to regional countries, which is why internal devaluation should be tried.
“A cost evaluation revealed that Zimbabwe is 45 to 55 percent higher than regional countries. We seriously have a cost problem which is a big challenge in terms of competitiveness. If we do not find ways of controlling our costs we will have a situation where we remain with parastatals after all private industries have collapsed,” he said.
Mr Moyo, who is also the chief executive officer of United Refineries Limited added that on December 9, there will be a symposium on internal devaluation with Government officials and technocrats to chart out the practicality of the concept.
Africa University business management lecturer and economist Mr Thomas Masese concurred that the concept was feasible. “During the Zimbabwe dollar era we removed zeros and it helped us stabilize our economy. “This is the same concept only that without a local currency we will have to focus on reducing labour costs which are primarily the major cause of Governments year on year recurrent expenditure.
“For internal devaluation to work we must also work on our way of thinking as a nation, but feasibly the concept can be done,” said Mr Masese. The high cost of doing business in the country has often been cited as the major shortcoming in improving the competitiveness of local industry.
Mr Masese added that in the wake of uncontrollable factors like the countries low energy delivery and liquidity constraints due to lack of foreign direct investment, internal devaluation would be the best practical move to help stabilise the socio-economic environment and reduce the country’s soaring cost of living.
Online Reporter