adminMidlands Correspondent
The multi-currency regime is impacting negatively on the local steel manufacturing industry and only the reintroduction of the Zimbabwean dollar could resolve some of the challenges bedevilling the sector, Steelmakers Zimbabwe group general manager Mr Alexander Johnson has said.
In an interview on the sidelines of the just-ended Kwekwe Expo on Friday, Mr Johnson said the steel industry has found the going tough as constant fluctuations in the greenback and the rand have had a negative impact on the viability of exports in the region.
This, he said, was in spite of the positive impact the multi-currency system has had on the economy.
“Foreign customers preferred being quoted in their own respective currencies to cushion themselves from the fluctuations of the greenback on the international market,” said Mr Johnson.
He said the reintroduction of the local currency will help restore viability in the steel industry. Mr Johnson said the local currency would also help cushion the economy from the uncertainty of dealing with adopted currencies on the international market.
“Any country needs its own currency to cushion the economy from activity on the international market. Our own currency can absorb any shocks emanating from activity on the international market.
“The steel industry is feeling the pinch of using alien currency particularly in the export business. Most foreign customers prefer trading in their own currency. When we do our exports to South Africa, for instance, they will pay you using the rand. When you then bring home the rand and you want to import raw materials using the greenback, you lose out because the rand is weak,” said Mr Johnson.
However, the Minister of Finance, Cde Patrick Chinamasa, recently dismissed chances of an immediate return to the local currency. He said the multi-currency regime will be maintained until the economy stabilised.
The Zimbabwean dollar was suspended in 2009 at the height of the economic meltdown and hyper-inflation brought about by the illegal sanctions.
The country adopted a multi-currency regime which is being dominated by the United States dollar and the South African rand.
Mr Johnson said cheaper steel products from outside were flooding the market, affecting local industries.
He said the imported cheap steel products were also affecting the pricing structure of steel products.
“This has resulted in exports to our traditional markets in the region such as South Africa, Malawi and Zambia falling by about 30 percent,” said Mr Johnson.
The Redcliff based steel manufacturer is operating at 70 percent capacity producing 40 000 tonnes of steel bars per month.
Online Reporter