adminNgoni Dapira Business Correspondent
The ‘hard-talk’ Confederation of Zimbabwe Industries congress, which ran under the theme ‘Taking Zimbabwe’s industry to the next level’ and ended last Friday, saw several pertinent issues on the state of the economy being robustly debated. It was commendable to hear the captains of industry and senior government officials speak boldly about the dire state of the economy and chart ways to revive the economy.
Issues of the multi-currency regime and demonetisation of the Zimbabwe dollar, protectionism of local industry and labour law reforms topped the agenda a most participants present spoke profoundly on the topics.
Speaking on the currency debate, Bankers Association of Zimbabwe president, Mr Sam Malaba said it was imperative that Government retains the current multi-currency for the foreseeable future. And on demonetisation he said there was need for wide stakeholder consultations on the optimal methodology.
“Going forward, it is imperative that Government retains the current multi-currency for the foreseeable future, in light of the need to maintain price stability as necessary to strengthen confidence in the banking sector for overall economic growth.
“An early introduction of the local currency is certain to cause panic withdrawal of the US dollar deposits- a stampede that will occasion a banking sector crisis and an economy wide meltdown will ensue…
“On demonetisation, the demonetisation of the Zimbabwe dollar will go a long way towards re-establishing confidence in the banking sector, particularly if the process is implemented transparently. The process must not confer any special advantages on a particular group or individual,” said Mr Malaba.
Allied Timbers group chief executive, Mr Joseph Kanyekanye said the United States dollar was making Zimbabwe uncompetitive and was of the idea of eliminating the US dollar and adopt the South African rand (Rand) as a main currency to promote regional competitiveness.
The main guest speaker, Norwegian development economist and renowned international speaker, Professor Erik Reinert, however said the currency debate must critically be on how the currency adopted should be used for storage of wealth (holding), debating on which was the best mineral resource to pin it against, either gold, diamonds or whichever mineral was more ‘secure’ in the country, but generally Zimbabwe could use whatever currency they liked.
On protectionism of local industry, Nestle chief executive and former CZI president, Mr Kumbirayi Katsande, said protectionism was fundamental.
“There is need for clear cut policies on industrialisation, whether there should be protectionism or not as a way of luring investors and protecting local companies which are shutting down almost every month.
“We however have to take some cautioned, but radical measures to close the borders and protect our local industry or we will continue to die a slow but painful death.
“Let us take a bold step as industry and Government to have minimum imports,” said Mr Katsande.
Mutare businessman, Mr Joe Sanhanga concurred and said there was no need to have an open market economy at the expense of local industry dearth, when local industry was needed for employment and fiscal growth.
The permanent secretary in the Ministry of Industry and Commerce, Mr Staneslous Mangoma said engagement with the Southern Africa Development Community had already begun and they were requesting for a derogation period of three to five years to support local industry against the influx of cheap imports, which would mean closing the borders from imports of some products.
Mauritius economist, Mr Patrick Meyepa, who was an invited speaker said Mauritius was a duty free country with 90 percent of its imports coming in duty free, but they were booming.
“In Mauritius we try to be wiser than our competitors. Zimbabwe needs no control its porous borders and have strategic policies in place to cut costs of production and lure investors to support the manufacturing industry, which is a key component for the economic growth of any country,” said Mr Meyepa.
On labour market reforms it was unanimously agreed that they were necessary. Mr Malaba said labour market reforms were the only avenue for adjustment for industry to control overheads.
“Given the absence of the exchange rate as an adjustment mechanism, against the background of an appreciated US dollar, the only avenue for adjustment in Zimbabwe is wage adjustment or productivity gains or both.
“Labour market flexibility is therefore critical otherwise the economy will continue to adjust to imbalances through the current quantity adjustment-which is real Gross Domestic Production contraction,” said Mr Malaba.
The congress participants agreed that because the economy required substantial amounts of capital for recovery and growth estimated to about $27 billion —Infrastructure development — $10 billion; Industry — $8 billion; Mining sector 47 billion; Agriculture (including infrastructure rehabilitation) — $2 billion) , the only viable alternative was Foreign Direct Investment.
For that reason, industrialists requested for urgency on the review of the indigenisation and empowerment measures, the need to strengthen and ensure property rights for investors and the reform of labour laws, as key macroeconomic policies to attract inward investment and FDI. Minister of Industry and Commerce, Cde Mike Bimha, called for the establishment of a committee from the private sector to examine how to best deal with the cost structures of doing business in Zimbabwe and the imports debate. He said as Government they would continue to work closely with industry and would involve them in the identification process of key industries that could be resuscitated as Government implements ZimAsset.
In his parting words, Prof Reinert reinforced on the need for the revitalisation and protection of local industry and said, “If the wish is to make it possible for as many Zimbabweans as possible to live well in Zimbabwe, the only viable way forward is to strengthen manufacturing.” He said Zimbabwe should not follow the route of Bolivia, which at one point was considered the richest country in mineral wealth, but called ‘beggars sitting on a pot of gold.’
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