‘Rand adoption not economic solution’
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