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Govt urged to implement new policies with speed

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THE business sector has urged government to implement new policies with speed or risk further contraction of the economy characterised by more company closures, job losses, skills flight and shortfalls in public revenues.

TARISAI MANDIZHA
BUSINESS REPORTER

Confederations of Zimbabwe Industries (CZI) president Charles Msipa said in an interview the business sector stood ready to work with the government to implement new policy measures aimed at easing business conditions and reduce costs.

“There is broad agreement on the need to implement more investor-friendly policies in order to attract greater levels of investments and to create and maintain employment. The key is in disciplined and timely implementation of the measures,” Msipa said.

“If the measures are not implemented with speed, the economy is likely to contract further, leading to more company closures, job losses, skills flight and shortfalls in public revenues versus expenditures.”

Finance and Economic Development minister Patrick Chinamasa projected a growth rate of 3,2% in 2015 in his budget presentation for this year.

“Coming off our low base and low rate of growth in 2014, this is achievable but by no means assured or guaranteed,” Msipa said.

“Whether or not we achieve it will depend on the urgency and decisiveness with which policymakers and the business sector act to implement measures to create an enabling environment that promotes domestic and foreign investment and addresses the loss of competitiveness of Zimbabwean producers in the last three years.

“Given the soft performance of our economy since 2012, we should really be targeting to grow at annual rate of 6-7% in order to create the required level of employment.”

He said Chinamasa correctly identified the downside risks that could militate against the achievement of a growth rate of 3,2%. These included weaker than anticipated recovery of the global economy, continued decline in international commodity prices and the likelihood of mid-season dry spell in the second half of the agricultural season. Other risks were continued depreciation of the rand against the US dollar, which will further erode the competitiveness of locally-produced products. Such risks will require constant monitoring to enable remedial measures if need be.

The Zimbabwe National Chamber of Commerce past president Trust Chikohora said Zimbabwe economic growth has slackened to levels of 3% and with the possibility of dropping further in the midst of a deflation.

“In 2014 the economy was in free fall while politics ruled. As long as we don’t put the economy first, the situation is likely to deteriorate further. This economy needs a lot of capital to get going again. Foreign Direct Investment, balance of payments support, development assistance and lines of credit,” Chikohora said

He said this required re-engagement with the international community and serious review of the indigenisation legislation buttressed by massive confidence building because business confidence is very low in Zimbabwe.

“So if drastic measures are not taken the situation will continue to deteriorate further with drastic consequences,” he said.

In 2014, the manufacturing sector activity continued to be weighed down by antiquated plant and machinery, inflexible labour laws, cheap imports and high cost of production, among other challenges.

Capacity utilisation has shed 3,3%points, from 39,6% in 2013, to 36,3% in 2014.

According to the 2015 national budget, the sector is expected to register a marginal growth of 1,7% this year hinged on sustained implementation of supportive policy interventions enunciated in the 2014 Mid-Year Fiscal Policy Statement.

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