THE immediate solution to the liquidity crunch and revival of the country’s agricultural sector are key steps that can salvage the industrial sector, an official with the Confederation of Zimbabwe Industries (CZI) has said.
The country is currently reeling under an acute liquidity crunch as most money continues to circulate in the informal sector while poor economic sector performance and company closures have become the order of the day.
CZI vice-president Henry Nemaire said his forecast for the third quarter ended September this year was that things would continue to be tough for industry until issues around liquidity had been decisively dealt with.
“With regard to agriculture, the issue of land tenure must be resolved. There should be closure to land tenure, whether it would involve issuing of title deeds to corporates or 99-year leases,” he said, adding that reviving this sector would have a ripple effect on the rest of the economy, in particular improved industry performance owing to value addition.
Trade experts say Zimbabwe urgently needs to re-establish vibrant, diversified and strong functional linkages between agriculture, mining, construction and the services industry so as to maintain a sustainable economic growth trajectory.
Nemaire said the CZI congress recently held in Mutare acknowledged the steps taken by government to offer A1 farmers permits and it was resolved to ensure that the process is also extended to A2 entities.
An estimated 66% of Zimbabwe’s land falls under communal farmers with experts saying the smallholder farmer plays a critical role in agricultural production and food security.
Up until the year 1999, 74% of bank lending was channelled towards agricultural production activities, but following the land reform exercise, bank lending to the sector had drastically dropped to 7% by 2008 as there was no land-based collateral.
Nemaire said there was need for a radical position in as far as stemming the tide of imports into the country was concerned as these were issues affecting local producers on a daily basis.
He said that congress deliberated on the need to discourage the country’s propensity for importing products which are already produced in the country.
“For instance, we are producing up to 17 000 tonnes of tea annually and this year we expect to produce 20 000 tonnes. Zimbabwe consumes around 4 000 tonnes. So really there is no need for us to import such a product and we need a radical position in this regard,” he said.
“With regard to currency, we acknowledged that the multi-currency regime should continue to be used, but we need to deal with the shortcomings of that regime in order to make our products competitive. There is a need to follow basic principles of economics.”
Nemaire said the hope was that once the $4 billion promised by China hits the country’s accounts there was need to ensure that it would be channelled towards the productive sectors in the economy.
This follows reports that government was seeking a $4 billion bailout package from China to stabilise the country’s deteriorating economic crisis.