Industry demands concrete action

ZIMBABWE’S industries yesterday called for concrete action to stem the economic “bloodbath” that has been precipitated by currency depreciation and exchange rate volatilities.

Confederation of Zimbabwe Industries (CZI) president Kurai Matsheza’s call for action came as a new survey revealed that firms ramped up output last year, with industrial capacity utilisation rising to 56,24% last year, from 47% in 2020. He said business was worried that government was procrastinating when the crisis was spiralling out of control.

“It would be remiss of me not to talk about the current crisis which is both a currency crisis and probably also a solutions crisis,” Matsheza said.

“We have been consistently calling for policy measurers to halt the emergence of a crisis that was somewhat predictable. The fundamental issue is exchange rate management and we have been making this call for as long as we remember. Getting the price of foreign currency right is a fundamental matter of Zimbabwe’s economic development interest. Correcting the exchange rate pricing is what will stabilise the economy and provide some room to continue on the growth trajectory that we were experiencing in 2021. This would also create room for the authorities to address the structural issues for long-term sustained growth and stability,” he said.

“We are convinced that convergence of the rates brings stability as this was achieved at the beginning of the auction when a large part of the economy was indifferent to holding Zimbabwe dollars. An overvalued Zimbabwe dollar broadly undermines the scope for maximising structural efficiency and the growth of both the export industry and import substitution. The policy of maintaining an overvalued Zimbabwe dollar imposes a big tax on the export industry undermining its growth and transparency. The policy also unwittingly subsidises imported industrial goods that then start competing unfairly for supermarket space with locally-manufactured goods and accelerates de-industrialisation. Efficient price discovery must be allowed and an efficient market established, as without doing this the authorities will be chasing symptoms which symptoms continue to mutate as long as the arbitrage windows remain open,” he added.