Govt, business in frank talks

GOVERNMENT and captains of industry yesterday held a no-holdsbarred indaba at State House to find lasting solutions to the challenges facing the economy.

The bottlenecks have manifested in intermittent supplies of basic goods and high prices, where they were available.

A breakfast meeting involving the critical parties was the first since the country was plunged into serious shortages of mainly cooking oil, fuel and bread.

President Mnangagwa, who was excited about the centrality of the meeting, set the ball rolling with a keynote address before journalists were asked to temporarily leave the venue to allow for robust debate.

Sources that attended the closed door session told The Herald last night that the private sector came under “some drubbing from some of their colleagues” for expecting “too much” support from Government when they were not doing enough to warrant the same.

Government was not spared, particularly for “poorly communicating key policies” involving bank balances.

“The cooking oil sector was criticised for joining the queue for foreign currency from the Reserve Bank of Zimbabwe (RBZ) so that they buy feedstock,” said a source.

“The private sector player, who has led one of the country’s biggest companies (name supplied) in the recent past, questioned why the cooking oil sector was not queueing to get land from Government so that they grow soyabeans and/ or sunflowers which are key ingredients in the manufacture of cooking oil. The land is there, rains are there and farmers are also there, why are they not growing their soyabeans?”

Zimbabwe spends $20 million per month importing soyabeans to support cooking oil production.

United Refineries Limited (URL), a Bulawayo-based cooking oil producer, and Pure Oil, the producers of Zimgold cooking oil, have now started soyabean contract farming to reduce dependency on imports.

Bread makers also came under stinging criticism for not taking up land and contracting farmers to grow wheat.

Currently, Zimbabwe is grappling with bread shortages due to low wheat supplies.

From the winter wheat crop, about 120 000 tonnes are expected to be harvested, which are only enough for about four months, leaving the country with the burden to import over 300 000 tonnes.

Delta Corporation, which never went to the RBZ to seek foreign currency to import barley and red sorghum for its Chibuku product, was cited as an example of how other sectors of the economy should operate.

The reluctance by companies to support the value chain means the country takes a triple knock; underfunded farmers and limited throughput and building greater input dependency.

The dairy sector got plaudits for its backward and forward linkages, which is not happening in other sectors.

The private sector was also roasted for “having nothing to show” for the support obtained from Government since 2016, in the form of policies such as SI 64 (now upgraded to SI 122 of 2017), foreign currency allocations, and a protective market.

Sources said Government and other private sector players said industry “has not retooled, increased production levels and has not started backward and forward linkages”.

“There came a recommendation that ‘let’s not just agitate for a transparent disbursement of foreign currency’ but we must now ask what you have done with the tranches of forex you got.

“I tell you that they just fell short of saying you are the ones that were in the black market,” said the source.

Confederation of Zimbabwe Industries (CZI) president Mr Sifelani Jabangwe provided “exciting” employment statistics in industry.

Mr Jabangwe said 800 000 jobs have been created both in the formal and informal sector, the highest ever number which is close to what was achieved in 1965.

The biggest number of jobs created has been 300 000 jobs.

The statistics come at a time when discourse in the country among pseudo-economists is that there is 90 percent unemployment rate in the country.

Mr Jabangwe called for the suspension of SI 122 to “be temporary” to retain the jobs, a point that President Mnangagwa had already underscored, since the policy is consistent with the country’s industrialisation agenda.

While Government was excited that the private sector was slamming each other, it also came under attack particularly for the mayhem of the last three weeks.

Industry and bankers claimed policy pronouncements from the executive, especially on bond notes, the RTGS and opening of foreign currency accounts, were responsible for the shortages and pricing madness of the last few weeks.

Bankers and industrialists said: “We had accepted the bond notes and RTGS for the past two years after a hard-sell, to the extent that up to $9 billion in RTGS is transacting well, then came the announcement which resulted in a loss of confidence.”

Government is said to have taken that as a fair comment.

Further, industry called on Government to speak with one voice on policy issues to avoid discord.

President Mnangagwa pledged that going forward, public pronouncements contrary to Government policy from “whomsoever, should be treated with the contempt” they deserves.

“Such contrary statements are meant to cause mayhem. We cannot continue along that path. Not anymore. We need unity of purpose to overcome our challenges,” he said.

Industry also criticised Government for the pricing challenges arising from the 2 percent tax on all electronic transactions.

It was industry’s view that the tax trnaslates to about 30 percent as it compounds itself from the purchase of raw materials by companies right up to the consumer.

Business said the shortages of products on the market were occasioned by confusion over how to price them.

The 2 percent tax was also seen as adding the cost of production to an already difficult operating environment.

Equally, the suspension of SI 122 came under intense debate with industrialists wanting to establish how they will price imported commodities given the need to restock using foreign currency.

Finance Minister Professor Mthuli Ncube is said to have promised to announce a comprehensive solution in the 2019 National Budget Statement expected late next month.

The mining sector also said the current set-up whereby they surrendered 50 percent of forex to the RBZ in exchange for bond notes or the RTGS at the 1:1 rate was affecting their operations since suppliers didnot recognise the rate.

If not addressed, said miners, the challenge would affect their operations, which have been doing well between January and September with minerals sales, apart from gold and silver, raking in $1,2 billion up from $1,1 billion in the same period last year.

Bankers also called for caution on policy pronouncements since reckless utterances had an impact on their international credit ratings.

Lower credit ratings translate to country risk.

Meanwhile, RBZ Governor Dr John Mangudya is said to have stolen the show by succinctly responding to queries from industrialists, and telling them that his role was not to allocate forex but to meet the difference between earnings and the use of foreign currency in the economy.

Dr Mangudya’s grasp of numbers won himself admirers.

He told delegates that the country earns about $440 million per month against demand of almost $550 million.

Dr Mangudya indicted that the country was import dependent and despite forex allocations to industry, Zimbabwe remains undiminished in its import dependence.

“He said many companies were now producing with others increasing production, hence the foreign currency shortages,” said the source.

Dr Mangudya said Zimbabweans lack “self-belief, we talk down ourselves and we are merchants of negativity”.