‘Rand adop­tion not eco­nomic so­lu­tion’

Chronicle (Zimbabwe) - - Business - Busi­ness Ed­i­tor Oliver Kazunga Se­nior Busi­ness Reporter

ZIMBABWE needs a co­or­di­nated value chain model as a strat­egy to at­tain com­pet­i­tive­ness and in­crease ex­ports, in­dus­try cap­tains said yes­ter­day.

Dis­cussing at the on-go­ing Con­fed­er­a­tion of Zimbabwe In­dus­tries (CZI) an­nual congress in Bu­l­awayo, par­tic­i­pants who in­cluded in­dus­tri­al­ists, tech­nocrats and se­nior Gov­ern­ment of­fi­cials said the ben­e­fi­ci­a­tion route presents more op­por­tu­ni­ties for job cre­ation and eco­nomic growth.

They said em­brac­ing value chains was a crit­i­cal strat­egy to­wards re-in­dus­tri­al­i­sa­tion in Zimbabwe.

Value ad­di­tion and ben­e­fi­ci­a­tion is a key com­po­nent of the Gov­ern­ment’s de­vel­op­ment blue­print, the Zimbabwe Agenda for Sus­tain­able So­cio-Eco­nomic Trans­for­ma­tion (Zim-As­set: 2013-18).

“We need to look se­ri­ously into the value chain is­sue be­cause we are not com­pet­i­tive as a coun­try and in the re­gion,” in­dus­tri­al­ist Dr Cal­listo Jokonya said.

Zimbabwe’s man­u­fac­tur­ing in­dus­try util­i­sa­tion is around 34 per­cent.

This has cre­ated a sup­ply gap in the economy, which ca­pac­ity ZIMBABWE will not be rushed into adopt­ing the South African rand overnight as that would be dis­rup­tive to the economy, Re­serve Bank of Zimbabwe (RBZ) Gov­er­nor, Dr John Man­gudya, said in Bu­l­awayo yes­ter­day.

Re­spond­ing to calls by sec­tions of the busi­ness com­mu­nity to adopt a softer cur­rency given the con­tin­ued strength­en­ing of the United States dol­lar, the RBZ boss said a lot of is­sues need to be con­sid­ered be­fore tak­ing such a route.

The Bankers As­so­ci­a­tion of Zimbabwe and the Con­fed­er­a­tion of Zimbabwe In­dus­tries (CZI) have rec­om­mended the adop­tion of the rand as the ma­jor trans­act­ing cur­rency to re­duce con­cen­tra­tion risk as­so­ci­ated with the strong US$.

The US dol­lar now ac­counts for 95 per­cent of all trans­ac­tions in the coun­try fol­low­ing the weak­en­ing of the rand whose cir­cu­la­tion has di­min­ished to about five per­cent.

Em­brac­ing value chains crit­i­cal to­wards re-in­dus­tri­al­i­sa­tion

has re­sulted in ram­pant im­ports that have cre­ated an es­ti­mated $3 bil­lion trade deficit an­nu­ally.

CZI deputy pres­i­dent Mr Sife­lani Ja­bangwe stressed the need to in­crease link­ages be­tween in­dus­try and train­ing in­sti­tu­tions so as to en­hance knowl­edge trans­fer and in­no­va­tion.

Par­tic­i­pants con­curred say­ing learn­ing in­sti­tu­tions need to be well equipped to be busi­ness in­cu­ba­tors.

They said while the pri­vate sec­tor should drive the value chain ini­tia­tive, the Gov­ern­ment should play its part by cre­at­ing an en­abling in­vest­ment cli­mate.

There was con­sen­sus on the need to in­crease in­vest­ment in agri­cul­ture as the back­bone of man­u­fac­tur­ing in terms of pro­vi­sion of key raw ma­te­ri­als and bol­ster­ing food se­cu­rity.

In­dus­tri­al­ist Mr Kumbi­rai Kat­sande said busi­nesses should move with the times and not be rigid, chal­leng­ing com­pany ex­ec­u­tives to pro­duce for ex­ports.

CZI has al­ready iden­ti­fied 18 value chains that need to be re­vived in or­der to jump­start the economy.

Among these is the cot­ton to cloth­ing value chain, beef to leather value chain, fruit to can or hor­ti­cul­tural farm to juice, fish to fork value chain and so forth.

Dr Man­gudya told del­e­gates who are at­tend­ing the on-go­ing CZI an­nual congress in the city that the prob­lem fac­ing the coun­try was not a cur­rency is­sue but a pro­duc­tion mat­ter.

“Peo­ple say we can now go back to the rand. We can’t do that overnight, we should have done that in 2009. To put it back now is so dis­rup­tive that peo­ple will lose money be­cause of for­eign ex­change losses,” he warned.

“We need to work on it (adop­tion of the rand) con­tin­u­ously by en­cour­ag­ing trade. Whether that is rand or US dol­lars they don’t come here (Zimbabwe) cheap, you need to ex­port to get for­eign ex­change.

‘‘The rand is also for­eign ex­change so you don’t change the economy overnight by just chang­ing to the cur­rency.”

Zimbabwe adopted a bas­ket of cur­ren­cies that in­clude the rand in Fe­bru­ary 2009 to ad­dress the hy­per­in­fla­tion en­vi­ron­ment the coun­try was reel­ing un­der.

Dr Man­gudya chal­lenged lo­cal in­dus­tries to stim­u­late pro­duc­tiv­ity in or­der to ad­dress the liq­uid­ity cri­sis.

He said bring­ing back the rand into the economy can only be done ad­min­is­tra­tively by re­tail­ers start­ing to ac­cept trad­ing in rand as well as com­pa­nies adopt­ing the multi-pricing sys­tem.

“No one is re­fus­ing com­pa­nies in Zimbabwe to utilise the multi-pricing sys­tem. We’ve spo­ken to the tourism sec­tor that they can use the multi-pricing sys­tem...this ad­dic­tion to the US dol­lar is what we want you to change and that change be­comes painful.

“It’s not about the Gov­ern­ment an­nounc­ing that the Re­serve Bank says ‘start­ing tomorrow we’re now us­ing the rand’. That’s not the so­lu­tion, the so­lu­tion is to start ac­cept­ing the rand along­side other cur­ren­cies be­cause we’re in a mul­ti­c­ur­rency sys­tem,” said Dr Man­gudya.

Since 2014, the South African rand has been weak­en­ing against the green­back, a sit­u­a­tion that has put pres­sure on the US dol­lar due to strong de­mand in the economy.

To ease pres­sure on the US dol­lar, Dr Man­gudya chal­lenged CZI to en­cour­age its mem­ber­ship to start ac­cept­ing the rand.

Deputy Min­is­ter of Lo­cal Gov­ern­ment, Pub­lic Works and Na­tional Hous­ing Christopher Chin­gosho (with scis­sors) cuts the rib­bon at the ground break­ing cer­e­mony in Vic­to­ria Falls yes­ter­day while Min­is­ter of State for Mat North Prov­ince ( 2nd from right) Cain Math­ema, and Vic­to­ria Falls Mayor Coun­cil­lor Si­fiso Mpofu (right) and oth­ers look on

RBZ Gov­er­nor Dr John Man­gudya

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