SI 64 ignited confidence: CZI

ZIMBABWE’S struggling economy plunged into crisis in 2016, performing at its worst since the introduction of the multi-currency regime in 2009.


CZI president Busisa Moyo

CZI president Busisa Moyo

Analysts and captains of industry have placed blame squarely on government’s shoulders, citing failure by President Robert Mugabe’s regime to be pro-active.

The manufacturing sector, whose capacity utilisation increased to 47,4% from 34,3% during the inclusive government, according to the Confederation of Zimbabwe Industries (CZI), remained subdued due to rampant corruption, policy instability and confusion, lack of access to cheap finance, competition from imports and low demand for domestic products.

In the period under review, an average of 200 workers lost their jobs every month in 2016, meaning that over 2 000 workers were rendered jobless, according to the Zimbabwe Congress of Trade Unions.

Due to the economic decline, Finance minister Patrick Chinamasa was forced to revise the 2016 economic growth rate to 1,2% from the 2,7% forecast earlier this year. The reasons proffered by government were poor agricultural performance due to drought and subdued global commodity prices.

Captains of industry, economists and labour unionists concur that 2016 was a tough year.

CZI president Busisa Moyo said problems faced by industry included competition from imports, capital constraints and the liquidity crisis, among others.

He said smuggling and corruption remained a problem in spite of measures to support local industries.

Moyo said although protective measures were normal, all local players should be treated fairly and equally.

“Permits should be granted based on capacity or an industry rather than singling out a company and allowing it to import GMO for example. This makes competition unfair. There are also monopolies emerging which are making competition from domestic players unbalanced,” he said.

During the year under review, a number of giant companies managed to set up shop in the country following the introduction of policies such as SI 64.

The CZI boss said measures introduced by government to protect local industries had started bearing fruits as several companies increased production and employment while new companies managed to set up factories in Zimbabwe this year.

“[These include] Willowton, Zim Kings, Golden Glow, Arenel and PespiCo, just to name a few new entrants in response to localisation of industrial capacity in line with the general Sadc industrialisation agenda and a global thinking focusing on restoring and DE globalising production to stimulate domestic demand,” Moyo said.

He said 2016 had been fairly good for manufacturing in terms of bringing value addition into the spotlight and the importance of supplying local demand using local means of production.

The Zimbabwe National Chamber of Commerce president, Davison Norupiri, said even though the year was tough for business, they managed to get a reprieve from government through the SI 64 which helped local industry increase capacity.

“Through this policy, we have seen other companies setting up shop in the country. Government also launched the command agriculture programme and if we do justice to it, we will manage to feed ourselves. We have also seen the government coming up with export incentives in the form of bond notes,” Norupiri said.

Economic analyst Reginald Shoko, however, said government had been reactive instead of being proactive.

“It’s been a difficult year economically, as seen by the cash crisis and delays in workers receiving their monthly salaries,” he said.

Consumer Council of Zimbabwe manager for Matabeleland, Comfort Muchekeza, said the economy was not well and consumers had a torrid time trying to access their cash to buy the basic goods they needed.

“Consumers are merely recipients of goods and services provided by the government and the private sector and if the two don’t perform well, they also suffer. The year was very bad for consumers compared in isolation and to what consumers expected. There were cash shortages which resulted in people spending their productive time in bank queues,” Muchekeza said.

For the year 2017, industrialists and economists urged government to be pro-active and create the environment that is conducive for business.

“The environment is far from being conducive and the government must make a decision on whether it’s going to be a player or if it will play the regulatory and facilitative roles. The current economic challenges require government to be clear on which way to take and also get the parastatals to work because they are the backbone of the economic revival,” Shoko said.

Going forward, Moyo said they expected to see more support for local industries on a sector by sector basis to further boost the economy and reduce import dependency as well as stimulate exports.

This should be a government-private sector effort, he said.

“We expect the adoption by the private sector of softer currency like the Rand or an internal devaluation process using currency. Exports depend on a low-cost base,” he said. 

“If we can tackle these issues earlier in the year, 2017 will be a year of industrial expansion and prosperity. If government and private sector do not work with urgency and closely together, or are distracted by non-economic issues, then the year will be a difficult one for industry and we could see a reversal of the gains made in 2016,” he said.

Norupiri urged the government to support policies such as command agriculture, bond notes and SI 64 and even come up with other economic measures that support business.

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