adminZIMBABWE is a land of milk and honey, blessed with infinite natural resources and a plethora of mineral wealth with over 30 exploitable minerals. The landlocked country, which has a population of approximately 13,1 million, as of July 2013, was once referred to as the ‘‘breadbasket’’ of Southern Africa. Home to the second biggest known reserves of platinum in the world after South Africa and reckoned as the world’s fourth biggest producer of diamonds with its Marange diamond production representing about 13 percent of global rough supply on a per carat basis, Zimbabwe is no doubt a resource-rich nation.
There is also the Great Dyke which is host to vast ore deposits, including gold, silver, chromium, platinum, nickel and asbestos. Apart from the mineral abundance, agriculture also plays a key role in the economy which made Zimbabwe earn the title ‘‘breadbasket of Africa’’.
Despite all the infinite natural resources the country still reels from a nail-biting liquidity crunch, massive de-industrialisation and high unemployment rate estimated at above 70 percent. The Zimbabwe National Chamber of Commerce held its annual congress recently and had an extensive debate about the state of the nation and how to ‘‘transform economic blueprint into economic growth.’’
Post Business correspondent Ngoni Dapira caught up with ZNCC national president Mr Hlanganiso Matangaidze on Tuesday to discuss extensively some of the resolutions made during the congress. This is what he had to say.
ND: Thank you for this opportunity. What were the highlights of the congress during the panel discussions?
HM: Thank you. Generally, the consensus at the congress which ran under the theme ‘‘Transforming economic blueprint into economic growth’’ was that the economic blueprint, the Zimbabwe Agenda for Sustainable and Socio-Economic Transformation, can work.
However, as a country, which means Government, private sector and civil society, we all have to put our best foot forward for Zim-Asset to be a success. The highlights in the panel discussions were on Foreign Direct Investment, corporate governance, labour reforms, infrastructure development and education system reform.
ND: In the 2014 National Budget the Finance Minister, Cde Patrick Chinamasa, said the old formal economy was ‘‘dead’’ and a new economy spurred by the informal sector was emerging. What is your take on this and how feasible is the formalisation of SMEs?
HM: Minister Chinamasa was just being realistic in the wake of the under-capitalisation of the formal industry and massive closure of companies.
However, at the congress the consensus was that big companies that are still viable should be recapitalised and co-exist with the Small to Medium Enterprises, which are key economic drivers and employment creators. Emphasis should be on the resuscitation of companies whose challenges can be met by our existing economy taking into consideration our comparative advantage internationally and regionally.
It was agreed that to solely focus on SMEs would be detrimental. SMEs are evasive and it will take time to formalise them. Zim-Asset is focusing on the medium-term plan, of which the formalisation transition of SMEs initiative by Government might not be feasible by 2018.
The focus in the ‘‘new economy’’ must be on creating a conducive environment for the SMEs and allow them to grow and operate freely.
This means first giving them the land to enterprise and giving them tax holidays for a grace period. SMEs are employment creators and their disposable income spills into the formal sector. So paradoxically it becomes a win-win even if they are given tax holidays because the Value Added Tax base grows from their disposable income spending. On re-capitalisation of key industry, government should create investor friendly policies to attract FDI’s, especially in the Special Economic Zones being proposed. On infrastructure development, improvement in power generation was considered as the major enabler to attract FDI and also improve productivity of local industry to give them a better comparative edge.
ND: How best can Government attract FDI which is pivotal in injecting money in the economy and addressing the current liquidity crunch in the country?
HM: We have to regain the confidence of the international community and lessen the perception of the ‘‘country risk’’ syndrome.
One way of overturning the negative perception of the country risk is ensuring policy consistency.
This has been the most critiqued flaw by Government, which they have been trying to address with President Mugabe this year setting the record straight on the indigenisation policy. The Zimbabwe Investment Authority needs to be properly capacitated and bureaucracy in all ministries must be cut short and be transparent when investors make inquiries. It was revealed at the congress that it takes six months in some cases for information to be sent back to a potential investor, whereas in South Africa it takes 48 hours.
ND: What was the consensus on the issue of labour reforms?
HM: There was agreement that the labour laws have to be aligned with the new constitution and the International Labour Organisation conventions.
However, what is of paramount importance is to be practical about the state of affairs in our economy and strike a balance between labour market flexibility and protecting the rights of employees.
Government, business and labour should all be prepared to face the transformation burden just like what happened during the Zimbabwean dollar to multi-currency system transformation.
A labour expert at the congress said Zim-Asset is anchored on indigenisation, empowerment and employment creation with a target of 2,2 million jobs by 2018.
So our labour reforms should co-relate workers’ remuneration with enterprise capacity and sustainability as the broad developmental objective.
ND: In his 2014 National Budget the Minister of Finance, Cde Chinamasa, said cost cutting of Government expenditure would be a necessity. What is your take on this and how best can this be achieved?
HM: No doubt this is important. If our revenue base is shrinking, Government expenditure should also shrink. We expect Government and the Minister of Finance to take this up seriously.
The civil servants employment cost is clearly unsustainable. This is at the expense of capital investment and money which can be used on social and developmental programmes. There are some institutions that have outlived their purpose and these should be commercialised. Agricultural and Rural Development Authority is doing the right thing by engaging in Public Private Partnerships and commercialising some of its estates. This is offloading burden which amounts to expenditure on Government. There is a lot of dead weight and Government is incurring a lot of unnecessary cost expenditure and this dead weight should be cut off. Government entities not profitable should die a natural death, those under-performing due to re-capialisation constraints should try PPPs or Government can take the commercialisation route.
ND: Lastly, how is Government and private sector engagement? Is the voice of the business community being heard?
HM: Government and private sector rapport has improved and Government is now open to criticism. There is a lot of engagement and ministers are prepared to face the business community updating on various drawbacks and initiatives.
Such visibility and rapport is important in our prevailing economic situation. Government needs buy-in on Zim-Asset from the nation and for this to be achievable they have to be visible and on the ground with the people. For instance, we had seven top Government officials at the congress, including ministers and deputy ministers from various ministries.
ND: Any parting words you want to say?
HM: In a nutshell, I can say our economic situation is not new to the world. Let us take the learning curve from emerging economies like South Korea, China, India to mention a few. Their economies grew and are still growing from SMEs. However, they had to put practical conducive policies to grow the sector. We do not have to reinvent the wheel, but just build on it or further develop it.
Online Reporter