THE Confederation of Zimbabwe Industries (CZI) has advised the soon-to-be formed government to put on hold a blanket approach on the indigenisation and empowerment regulations, adding that the policy required more clarity to stimulate economic growth.
In its submissions made during a meeting convened by the Office of the President (OPC) on August 2, CZI said in the short-term, there would be need to craft an economic policy which seeks to attract more capital as the country’s main economic sectors remain in doldrums due to underfunding.
CZI said the new government should adopt proposals made by different sectors in 2010 to ensure that the empowerment policy catapults economic growth, which has slowed down in recent times.
The meeting was chaired by an official from the Office of the President and Cabinet and was attended by CZI, other business organisation which include the Bankers’ Association of Zimbabwe, Zimbabwe National Chamber of Commerce, Chamber of Mines of Zimbabwe.
The meeting becomes the first following Zanu PF’s landslide victory in the just-ended general elections.
The party won a two-thirds majority in Parliament and may soon form the next government should the Constitutional Court dismiss a challenge on the outcome by outgoing Prime Minister Morgan Tsvangirai.
CZI said the new government should also manage political risk linked to the outcome of the poll results.
“(There is need for) better articulation of the indigenisation and economic policies taking into account recommendations of sectoral committes,” the CZI said.
“In particular, exceptions to the 51% rule for sectors requiring imported technology and capital not available in the country need to be highlighted. Unequivocal statement that the multicurrency system will be maintained for at least the full term of the government.”
The indigenisation law compels foreign-owned companies to sell 51% to locals.
Analysts say Zimbabwe has since 2009 attracted low foreign direct inflows due to lack of clarity on the empowerment policy as well as hassles in setting up a business.
FDI rose to $400 million in 2012 from $65 million in 2009.
In the medium-term, CZI said the government should engage in discussions and engage on the reintroduction of the local currency.
Reserve Bank of Zimbabwe has already allayed fears of an immediate comeback of the local currency which became worthless in 2008.
The government was also urged to restore confidence in financial markets that encourages savings by individuals and the informal sector and mobilising cheaper foreign lines of credit.
CZI urged the government to resolve infrastructure constraints and facilitate private sector investment in infrastructure as well as mobilising long-term capital for expansion projects.
Turning to the country’s external debt, currently hovering around $10,7 billion, CZI said the new government should fully engage creditors to ensure that the country’s creditworthiness improves.
Zimbabwe’s economy, according to Finance minister Tendai Biti, requires a $4 billion stimulus package to quicken economic growth.
Biti has already revised year end economic growth rate to 3,4% from the initially projected 5% to underperformance of key economic sectors.
The manufacturing sector has been struggling to grow since 2009 due to liquidity challenges, antiquated equipment and failure to compete with other products from the region.
Most companies in the sector have closed down and many people have been rendered jobless.
The majority of the companies in the sector are operating at less than half of their capacity as they fail to attract more working capital both locally and internationally.