Zim firms not ready for AfCFTA: CZI

CLOUDINE MATOLA

Confederation of Zimbabwe Industries (CZI) , the country’s largest business lobby group , has revealed that more than 50% of  local companies are not ready to participate in the Africa Continental Free Trade Area (AfCFTA), largely due to the harsh operating environment.

Rising production costs are the main reason why local businesses are struggling to remain in business.
In addition, businesses are being forced to choose between raising product pricing and accepting lesser profits in order to remain in operation due to the escalating costs of complying with statutory requirements and the skyrocketing cost of raw materials.

Speaking on the sidelines of a recent free trade workshop held in the capital Harare, CZI chief economist, Cornelius Dube confirmed the latest development.

“…The operating environment for Zimbabwe does not favour them (local companies) to be competitive. For example, if you look at the regulation on its own, Zimbabwe is over-regulated compared to other countries. And those regulations are all designed to collect money from industry. So the cost of compliance is huge. It costs about 18% of their total offer rates just to comply,” Dube.

He added: “And if you look at the key enablers, raw materials  are supposed to be transported by rail to make them more competitive, but they are being transported by road, which is costly.

“If you look at the toll gates that have just been increased, costs have soared.

Therefore, local companies are just hoping that there will come a time where the ease of doing business is going to be better so that they can adequately compete.”

CZI’s economic research officer Macdonald Mutego concurred saying according to the research they did, 45% of l local companies were not ready for free trade.

“As CZI, we did a survey and, in that survey, we included a question asking, are you ready to compete in the African jurisdiction? Overall, 34% of the survey came back saying that they were ready to compete. About 50% of the local companies  said they could not compete  and were not ready. The balance said they were not sure if they were ready to compete,” Mutego said.

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Buy Zimbabwe general manager Alois Burutsa said the cost of doing business in the country needs to be addressed for companies to be able to compete because as of now many companies will close down due to opening the borders.

“As a country we are not yet ready, because we need to have the conversation on the AfCFTA agreement together with a similar conversation to do with the cost of doing business in Zimbabwe because as long as our competitiveness is not right, the coming on board on the free trade is going to be bad news for us. It is  going to end up  with a lot of local companies going to close because they will not be able to compete,” Burutsa said.

He added: “As we speak right now, with the tariffs still in place, companies are already failing to compete. What more when the tariffs are removed? it is going to get even worse so our plea is to say let’s have a serious conversation with the government whereby we critically look at the cost of doing business in this country and see the areas that we can reduce so that our products become competitive.”

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