THE Confederation of Zimbabwe Industries (CZI) has called on government to find lasting solutions to perennial challenges impeding the country’s economic development.
These include exchange rate instability and foreign currency shortages.
The country is in the throes of an economic crisis, made worse by a debilitating liquidity crunch, and galloping inflation which has soared from 56,37% in July last year to 285,02% in August this year.
CZI president Kurai Matsheza told NewsDay Business that the need for economic progress by addressing the country’s headwinds was one of the main takeaways from the three-day congress held in Harare last week.
“The conference was well attended and discussions were robust,” he said.
“Some of the takeaways were the need to retire old issues that have been around such as forex availability, exchange stability, money supply (growth),” he said.
Matsheza said another issue that came under discussion at the congress was the need for industrial transformation to achieve the government’s Vision 2030 which is to create an upper-middle income economy.
He said there was also need to put together an industrial and trade policy.
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He pointed out that policy flip flops on the part of government were counterproductive.
He added that these were major obstacles to economic development.
“Policy inconsistency is not good for economic players and certainly not for business. It makes planning and forecasting very difficult. If there is no predictability in policies and availability of key economic enablers, then obviously, growth projection metrics will also be uncertain,” he added.
The CZI president said measures put in place by government to strengthen the Zimbabwe dollar and bring about stability, such as the introduction of gold coins, may not work.
“The measures by government are welcome by all. However, while these measures are mopping up liquidity, the impact on year-on-year inflation might not be significant enough to bring it down,” he warned.
“As long as month-on-month inflation is positive, the year-end inflation projection will remain high,” Matsheza said.
He noted that the multi-currency system must be maintained.
“With parallel market rates coming down, the Zimbabwe dollar will be a preferred currency in our view. Therefore the call for US$ salary and wage payments may have been overtaken by the events of a couple of weeks ago, if they get sustained,” he said
The call for wages indexed against the United States dollar had been amplified due to a depreciating local unit.
The slide in the value of the Zimbabwe dollar has had an adverse impact on most workers whose incomes are in local currency.
On the rise of the tax free threshold to $75 000 a month from an initial proposal of $50 000 monthly, Matsheza said the adequacy of this would be determined by the levels of inflation.
“If the inflation levels decline, this tax free threshold may be adequate. However if it starts galloping, obviously this figure will be eroded in no time,” he said.
Matsheza said CZI was in the process of consulting members on the input for the 2023 national budget.
Government is expected to present the 2023 national budget in a couple of weeks’ time.
On accusations by government that business was causing the weakening of the Zimbabwe dollar through profiteering, Matsheza said the stability of the local unit was determined by fundamentals.
“Currency stability is driven mainly by economic fundamentals of a nation in which all play a part — that is business, labour and government,” he said.
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