PHILLIMON MHLANGA AND LIVINGSTONE MARUFU
Industry is struggling to deal with the growing dichotomies, particularly with regards to currency conundrum as it is getting harder to forecast business outcomes, captains of industry have warned.
The executives asserted that they were working overtime in a bid to tide over the country’s currency crisis and vigorously pushing the government to develop a clear de-dollarisation roadmap , as failing to do so would cause serious macro-economic difficulties that would have a terrible impact on business.
The government in 2020 announced a de-dollarisation roadmap outlining how the economy will transition over a period of five years up to 2025.
The executives, however, are advocating for the multi-currency’s existence to be maintained past 2025, saying that the Zimbabwe dollar’s status as the country’s sole legal tender should be supported by sound local currency fundamentals.
“Topping the list is the need to genuinely deal with the boomerang effects of monetary and fiscal threats, with the government of Zimbabwe immediately coming clean on the state of the de-dollarisation strategy in the context of the usage of both local and foreign currencies.
“We strongly believe that monetary stability remains a cornerstone to business sustainability, particularly as we struggle to deal with legacy issues of value erosion, extraordinarily high corporate mortality rate, high taxes, death of individual savings, a crippling exchange rate regime and high inflation,” CEO Africa Roundtable chairman Oswell Binha said.
He added: “Whilst the National Development Strategy [NDS]1 places a cap of 2025 to mark the end of multi-currencies in Zimbabwe, monetary economists and the business sectors believe the country is not yet ready for a Zimbabwe dollar as a mono-currency. Zimbabwe’s currency crisis can be checked by extending multi-currency usage up to 2030, unlocking the credit market necessary for medium to long-term financing.”
The Confederation of Zimbabwe Industries president Kurai Matsheza weighed in saying currency issue remains a topical issue in this country and must be dealt with forthwith to inspire confidence.
“We have had difficulties over the past years and we need a clear roadmap as to where we are heading before we become clueless in 2025. The year 2025 has been set as the deadline by which the multicurrency system will end. We need to create and follow through the clear roadmap of what it is that we want to do as a country towards addressing currency issues,” Matsheza said.
He said the government should be the best promoter of the local currency and the bulk of the taxes should be demanded in Zimbabwe dollar so that the authorities can encourage the use of the local currency.
“Lets have a clear roadmap on the Zimbabwe dollar, if we rush it, this may cause other dislocations in the economy. There is a huge need for some steps that encourage the use of the domestic currency,” he said.
The national public debt, which is over US$17bn the unfavorable current and trade balances, the rising political risk, the problems with the energy supply, and the dynamic geopolitical risks, according to Binha, continue to be threats to the growth and sustainability of the Zimbabwean economy.
“Of concern is (also) the puzzle of the split between local and external debt, particularly the inability of the country to repay accumulating arrears and penalties in the process, which has an irreparable dent to the achievement of medium policy objectives. The country has formal structures, processes and procedures which, if followed, will result in optimal management of the country’s debt. We risk running an insolvent government if debt contraction is not checked.
“We believe that government commitment to follow the established and tested macroeconomic management processes will have a knock-on effect on re-establishing lost trust and confidence. The country must be seen to be rewarding hard, honest work. The Roundtable remains at your disposal for robust discussions on these, among other issues. We will continue to provide guidance to you and the entire team at the ministry (of industry and commerce). We do have important feedback from several investment missions we have undertaken during the life of the new dispensation, most of which are relevant as you embark on another journey beyond NDS1,” Binha said.
Matsheza expressed concern about how the state of the economy as a whole will be impacted by the declining industry performance.
“You are taking over an industry that has been on a decline as the industry is now contributing just above 11 % of the Gross Domestic Product from 25%. In an economic transformation of a country, industrial transformation should be at the centre of that as without it the country will not develop the way we want,” Matsheza said.