Poor policies affect Zim’s economic performance

POOR policy framework is one of the major causes of the current economic woes affecting the country, Zimbabwe National Chamber of Commerce (ZNCC) president, Hlanganiso Matangaidze has said.

BY MOSES CHIBAYA

Giving oral evidence on the country’s economic performance before a parliamentary committee on Industry and Commerce last week, Matangaidze said the country’s economic problems could be addressed if progressive policies were put in place.

For example, he said, because of poor policies, diamonds mined in Zimbabwe — a country with over 85% unemployment rate — were creating jobs in other parts of the world.

“The issue really is about policy. Our diamonds created 60 000 new jobs in India. In terms of policy for cutting and polishing [diamond] we are saying for one to have a cutting and polishing [diamond] factory, you need a licence of US$100 000,” said Matangaidze.

“In India people are polishing diamonds from the back of their homes. Can we possibly do that here with a licensing fee of US$100 000? How many school leavers can afford to pay that money? Can you imagine what would happen to a city like Mutare if you got 60 000 jobs?”
The government increased the beneficiation licensing fees from US$20 000 in 2011 to US$100 000.

After a public outcry, the government was forced to make a U-turn and reduced it to US$50 000 in May 2013, but analysts said that figure was still high and discouraged people from investing in that sector.
Matangaidze said Zimbabwe needed a paradigm shift if it were to bring the economy back on its feet.
“Really, it’s all about policy and I think we have to relook at our policies,” Matangaidze said.

ZNCC head of macro-economics committee chairperson, Brains Muchemwa said the country still suffered from lack of investor confidence.
“Confidence is one of the major issues that are affecting investment and re-investment in this economy,” said Muchemwa.

“What every economy requires is continuous investment or to some extent what you call continuous physical capital formation whereby existing companies continue to refurbish and increase their capacities.”

Muchemwa said there was need to build confidence among investors.
He encouraged government to focus on companies that are “still viable”, rather than distressed industries.

The government in 2011 launched the Distressed and Marginalised Areas Fund (Dimaf) and to date 31 companies have managed to access part of the US$40 million under the programme.

“What is important now is for government to focus on the companies that are still viable that are still on their feet,” he said.
Muchemwa said a lot of companies were distressed because of mismanagement.

“To some extent they are distressed because they accessed a lot of debt in the market and they failed to repay it. As such, creating a fund that would be targeting distressed industries would not do anything other than allow these same companies to just refinance their debts and remain where they are,” Muchemwa told the committee, which is chaired by Marondera central legislator, Ray Kaukonde.

Zimbabwe, still on an economic recovery path after a decade long crisis, has an external debt overhang of US$12,6 billion, which accounts for 116% of the Gross Domestic Product (GDP).

3 Responses to Poor policies affect Zim’s economic performance

  1. sdfghjkmnbvcx November 7, 2013 at 1:12 pm #

    BOREHOLES and IRRIGATION engineers
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  2. farai November 17, 2013 at 9:15 am #

    Brains Muchemwa’s neoliberal economics are dangerously bookish and would never see the light of day in any national economic recovery plan of a country serious about reviving it’s industries and jobs. To claim that all companies that are distressed are in that condition because of mismanagement and as such should not be saved but let to die in the hope that new ones might arise is as dangerous as saying liberalize our markets to make our firms more efficient!. The west is busy supporting its industry through capital injection bailouts and some amongst us are advocating a swim or sink policy!

    if we listen to Brains, all companies will surely die and we can forget about economic recovery. Local firms need affordable capital and market protection to recover and they also need export earnings. Management skills and labour skills we have plenty, ma dollar for two. Surely they can’t all be useless! Why are these guys so scared to accept that sanctions have affected Government’s ability to mobilize resources for the country, sanctions have shut Zimbabwean firms out of their traditional export markets, sanctions have forced FDI firms to disinvest from our country and made us a perceptual high risk investment destination. There will be no turn around whilst the sanctions monkey is firmly stuck on our back. Even the most resilient economy would collapse under sanctions. First things first let’s do everything to get them removed.

    The Rhodies were able to build a strong economy because of a strong import substitution policy, import restrictions, buy local mindset and government and industry seamless alignment on political and economic policy. Let’s recall that policy blueprint from national archives for insights. They got many things right on the economy.

  3. BlueCollar November 17, 2013 at 10:10 am #

    Well spoken indeed, but why are the sanctions there in the first place

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