Chronicle (Zimbabwe) - - Business Chronicle - Pros­per Ndlovu

ZIM­BAB­WEAN com­pa­nies should seek im­proved com­pet­i­tive­ness and pro­duce for ex­port to boost liq­uid­ity in the econ­omy and cre­ate jobs, Dairi­bord Hold­ings Lim­ited chief ex­ec­u­tive of­fi­cer, Mr An­thony Mandi­wanza, has said.

e pre­vail­ing liq­uid­ity prob­lem and reliance on im­ports are a symp­tom of poor do­mes­tic pro­duc­tion and a loss of the ex­port edge, he added. An es­ti­mated 100 firms or more have closed shop in Zim­babwe in the last decade forc­ing thou­sands of work­ers out of work.

Speak­ing dur­ing the just-ended Con­fed­er­a­tion of Zim­babwe In­dus­tries (CZI) congress in Bu­l­awayo, Mr Mandi­wanza said sup­ply­ing the do­mes­tic mar­ket with­out vi­brant ex­ports would not im­prove the econ­omy.

“Zim­babwe is a small econ­omy to ben­e­fit from economies of scale. We need to ad­dress the symp­toms of a deeper prob­lem. This econ­omy is not com­pet­i­tive,” he told del­e­gates. “Our cost struc­ture is be­tween 45 to 50 per­cent more ex­pen­sive than our re­gional coun­ter­parts hence the econ­omy is not grow­ing. In­stead we are see­ing neg­a­tive growth.” Since the adop­tion of the mul­ti­ple cur­rency sys­tem in 2009, Zim­babwe has been reel­ing un­der a trade deficit of about $3 bil­lion with im­ports of up to $7 bil­lion an­nu­ally. This has cre­ated a cu­mu­la­tive trade deficit of nearly $20 bil­lion in the last six years. Mr Mandi­wanza said ur­gent pro-ac­tive mea­sures must be im­ple­mented at all lev­els, from the Gov­ern­ment to pri­vate sec­tor, to breathe life into the econ­omy. “We need to pro­duce for the do­mes­tic and re­gional mar­ket. The use of a strong US$ as the main cur­rency cre­ates prob­lems and this needs to be ad­dressed in the medium to long term,” he said. “We may need to de­value the US$ and re­duce all the costs by, say 50 per­cent. The other op­tion is to play within re­gional lev­els so that we are not iso­lated.”

Dur­ing the meet­ing, it emerged that in the yester years, Zim­babwe’s econ­omy thrived on ex­port earn­ings from re­gional and over­seas mar­kets. Mr Mandi­wanza sug­gested that the cen­tral bank adopts a “soft cur­rency that speaks to the mar­ket we are tar­get­ing”.

Given that close to 60 per­cent of Zim­bab­wean im­ports and ex­ports come from South Africa, the Dairi­bord boss pro­posed the adop­tion of the rand along­side the US$.

At the mo­ment, Zim­babwe uses a bas­ket of cur­ren­cies that in­clude the US$, pula, rand, euro, yuan, pound and others.

Mr Mandi­wanza said the rand could be used as a trade and trans­ac­tion cur­rency with the US$ used as a re­serve cur­rency.

The in­equal­ity in the trade field in the re­gion, un­less ad­dressed, would con­tinue to suf­fo­cate the coun­try’s econ­omy and make it vul­ner­a­ble to cheap im­ports, he said.

CZI and a num­ber of eco­nomic ex­perts have also been push­ing for in­ter­nal de­val­u­a­tion and the adop­tion of the rand. How­ever, RBZ Gov­er­nor Dr John Man­gudya has warned that do­ing so would cre­ate prob­lems in the ex­change mar­ket.

Rather, he sug­gested that all ef­forts be di­rected at im­prov­ing pro­duc­tion out­put say­ing the coun­try’s prob­lems were not a cur­rency is­sue by a pro­duc­tion one. — @Pros­perNdlovu.

Mr An­thony Mandi­wanza

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