2021 growth rates under threat

RESPECTED banking sector executive, Israel Murefu (IM, pictured) has completed his tenure as president of the Employers’ Confederation of Zimbabwe ( Emcoz). Murefu recently passed the baton to Schweppes Holdings human resources executive Demos Mbauya, who has to complete several important programmes initiated by his predecessor. But Murefu’s tenure as the Emcoz president was eventful. He came in during a time when the Tripartite Negotiating Forum (TNF), which is a platform for business, labour and government to discuss pertinent national issues, became a legislated body. During his tenure, Murefu also had to navigate the devastating impact of the Covid-19 pandemic, which has wreaked havoc on the country’s economy since the global outbreak at the end of 2019. The devastation resulted in at least 30% of the country’s workforce losing their jobs, according to estimates by business. The World Bank estimates that up to 500 000 people lost their jobs in the country as a result of the Covid-19 pandemic. This week, our deputy business editor Kudzai Kuwaza (KK) caught up with Murefu to discuss his term of office, the challenges confronting Zimbabwe’s economy and the power and foreign currency shortages that continue to blight industries. Below are excerpts of their discussion . . .

KK: You became president of Emcoz during a difficult period for Zimbabwe. Now that you have completed your assignment, how would you describe your tenure as president?

IM: I would describe my tenure as eventful but successful because we achieved a number of objectives that we had set out to achieve on my election as president. The tenure had its trials and tribulations but we had more successes than unfinished business although scope for further achievements still remains.

KK: What were the highlights of your term of office as president?

IM: The highlights were the promulgation of the Tripartite Negotiating Forum (TNF) Act in 2019, the review and realigning of our strategic plan, collaboration with other business member organisations (BMOs), social dialogue as it related to Covid-19 disruptions, where, as TNF, we recommended the establishment of a stimulus package for business rescue from the devastating effects of the pandemic and its attendant lockdowns, promoting the current national vaccination programme, assisting business to adapt to the new normal, the creation of the Bulawayo chapter of Emcoz and participating at the International Labour Organisation conferences where in 2019, a convention 190 dealing with violence and harassment in the workplace was adopted as well as many other smaller but important achievements, which are too numerous to mention.

KK: What were the major challenges that you had to deal with during this period? Were you successful in dealing with these?

IM: The major challenges have been around the functioning and operations of the TNF, which are still not what we expected and in particular the lack of operating procedures and a secretariat to give effect to the decisions of TNF, failure by authorities to heed our call for tax relief to business related to expenditures incurred by employers in the fight against and prevention of Covid-19. We also experienced slow pace in the finalisation of the Occupational Health and Safety Bill, the Labour Amendment Bill and the Productivity Bill which are yet to be considered for passing by Parliament. There are also issues of lack of consensus among social partners on the question of the best approach to minimum wage setting, the inconclusive reconstitution of the Nssa (National Social Security Authority) board as well as non-participation of business and labour in sub-committees of the National Task Force on Covid-19. However, most of these issues are still work in progress and I hope they will gather traction and momentum within this coming year.

KK: We have seen an upsurge in the exchange rate in recent weeks despite the existence of the foreign currency auction market and other measures put in place to stabilise the markets. What impact will this have on business?

IM: The exchange rate, especially on the alternative market and the gap between it and the official auction rate, has been our major Achilles heel because it appears there is no solution in sight to contain or narrow it. The alternative market rate seems to be falling unabated and the effect and impact of it on prices is inflationary.

KK: So, what has been the impact of this on the economy?

IM: It has caused prices to shoot through the roof and price increases tend to affect everyone in the whole economic spectrum because everyone buys from the same market.

When the local dollar loses its purchasing power, it affects its attractiveness as no one will want to keep this currency or hold it as a store of value. A solution around the different exchange rates is needed sooner rather than later to avoid a relapse into hyperinflation. Inflation makes the cost of doing business go through the roof and planning and budgeting becomes a headache or nightmare because of uncertainty. Everyone must play their part in ensuring that our currency maintains the value that is still remaining in it because no one wants the situation that prevailed in 2008 to return.

KK: Zesa Holdings has announced a schedule for power outages. How will this affect business and its efforts to increase capacity utilisation?

IM: Zesa must put its hands on the deck and needs to be supported in any efforts to supply adequate power to industry. Power drives industry and it is the life blood, and without adequate power the cost of doing business shoots through the roof. Generators cannot run industry sustainably and they are costly to business.

Without power, capacity utilisation and productivity suffer and ultimately gross domestic product growth will be affected. We need a solution around energy supply now rather than later if our economy is to remain on a sound recovery footing.

KK: In light of all these developments, do you think the projected growth rate by the government of 7,8% by year end is still achievable?

IM: The projected 7,8% growth rate by the end of this year is seriously under threat and may not be realised without adequate and affordable power. The Minister of Energy and Power Development needs to ensure that Zesa is adequately resourced and capacitated to supply enough power to industry.

The use of generators is not only expensive but unsustainable. Without power most of our efforts to grow the economy will be in vain.

When GDP growth is stunted, everything else is affected in the same manner and this dynamic needs to be fully understood by the authorities so that remedial measures to assist Zesa to generate adequate power are implemented now rather than later.