Govt must repackage indigenisation policy: Mashakada

Business
A former Cabinet minister has urged government to repackage the indigenisation policy to boost investors’ confidence.

A former Cabinet minister has urged government to repackage the indigenisation policy to boost investors’ confidence.

BY TARISAI MANDIZHA

In his presentation in the National Assembly on a motion on cash shortages, former Economic Planning minister Tapiwa Mashakada said money markets operated on the basis of confidence.

“The confidence crisis, let us repackage our Indigenisation and Economic Empowerment Policy so that we get, not only foreign direct investment [FDI] but domestic investment as well into the country so that we can grow this cake,” the former minister said last week.

“We have got the natural resources and everything but what we lack is capital to make sure that there is growth in the country through manufacturing and production.

“Without money, there is nothing we can do.”

Mashakada said the cash crisis was a result of lack of investor confidence emanating from policy ambiguity and inconsistency, debt service, budget deficit and continued borrowing, illicit financial outflows, trade deficit and weakening of the rand and depletion of the nostro accounts.

He said the sluggish growth in the economy; low national savings, low-usage of plastic money and liberalisation of the capital account had also fuelled the cash crisis.

The economy has been experiencing cash shortages since the beginning of the year, resulting in banks placing caps on withdrawals as they try to manage the available cash.

The central bank and banks have responded to the crisis by reducing bank charges to promote the use of plastic money and thereby reduce the demand for cash.

The central bank has also announced the intention to introduce bond notes through a 5% export incentive facility.

The $200 million facility would be guaranteed by the African Export-Import Bank.

Mashakada said the cash shortages had resulted in the emergence of a parallel market where people were being charged more to get cash.

“There are now [cash] barons who are emerging and charging parallel market rates to give cash,” he said.

“If you go to the parallel market wanting cash, say $1 000 – you are given that $1 000 cash and you have to make a RTGS [Real Time Gross Settlement] to the bank account of the supplier on a premium of about 10% to 25%.”