ON Tuesday, Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya called on local companies to step up their game and brace for stiff competition, as foreign investors are reportedly eyeing Zimbabwe to set up businesses. But, with the challenges in remitting foreign currency outside, industry is still struggling to capacitate themselves to attract the investment. NewsDay business reporter Tatira Zwinoira (ND) interviewed Confederation of Zimbabwe Industries president, Sifelani Jabangwe (SJ) to find out whether indeed industry could “step up their game”.
By Tatira Zwinoira
ND: On Tuesday, the Reserve Bank of Zimbabwe governor John Mangudya said businesses should up their game. Do you think there is room in this current environment to do that?
SJ: I think that there is room because there are several things that we need to do.
One, we need to lobby for policies that work for both the local industry and investors. Two, in terms of identifying partners, industry needs to do that to grow exports, looking for funding to invest in their businesses is also part of stepping. Even growing exports in order to become self-sufficient, again, that is part of stepping up because, yes times have forced us to look inwards but we have to change very fast, so that we balance both the export business and what we should be doing locally.
ND: With this issue of foreign currency delays, will business be able to step up without that it being addressed?
SJ: That would be the constraint for even the investor and us.
What we are saying is that there is need for us to maximise the opportunities that are currently opening up to ensure that we position ourselves to engage with any investor that will be coming, that is the sort of form of stepping up within the current constraints that are there.
ND: How then do companies navigate around that problem of foreign currency delays in order to capacitate themselves to a point where they can step up?
SJ: We have got companies that are growing their export business because the RBZ has offered facilities where they can give you incentives of maybe up to 12%, but if companies do not go and apply for that it will not come, and that is stepping up.
If they do that, they become competitive on the export market and start exporting and you become self-sufficient in terms of generating your own currency which again gives you an advantage. So, we really need to take advantage of institutions by identifying what it is that can really help, not to just be dependent upon the RBZ.
Some (businesses) are even forming joint ventures with companies that have got better net exports, just to access foreign currency so I think it is really saying how creative can you be instead of just waiting for government to serve you.
ND: But, the argument has been ‘this is my money why should I have to go through this trouble with the RBZ?’ At the end of the day, the person has worked and expects to remit that money so why should it be a struggle in the first place?
SJ: With business you have to face reality. There is what is ideal and then there is reality. The reality you are facing is that basically the country does not have foreign currency for everyone at the moment and the opportunity is that if you are an exporter you get 100% of your currency.
Also, another reality is between the first and fourth quarter, there is no foreign currency until the tobacco floors open. Even in your own business, for example, strategies are about navigating the challenges you see and face. Perhaps you can approach your suppliers and say this time ‘I do not have money’ but can you help me so that I can start to export or else I will export 30% of my production into another country even if it means that I have to cut my prices to access foreign currency. I use that currency to buy local materials to serve the local market, but it can only be a specific business that are doing so.
It is not saying yes, we should not be in that space of saying the money is ours because in reality there is a deficit and in the long term we are hoping for the deficit to be cut and lobbied in another way, but at the moment that is the problem.
What is it that businesses are going to do? Like some of the money that is used to import for the agribusinesses, the RBZ has said you can borrow what is available then grow the soya and ground nuts, then you now do not need foreign currency which are some of the ways to step up and see how you can be part of the solutions.
Command agriculture came about because there were not too many commercial solutions to the problem that the country was going to be short of food. The private sector stepped up and said this country requires command which ended up being a government and private venture through the financier of the project that exceeded expectations.
This shows that they are somethings that we can do if we become more proactive.
ND: How is the uptake now of these special facilities that the RBZ introduced?
SJ: I think now we are now starting to see that uptake.
It has been slow but I think that is why the government and the RBZ are saying can you step up because they would like to see more utilisation on those facilities. When more companies utilise those facilities, then, the economy improves.
ND: What are some of those facilities that are on offer for businesses?
SJ: Well, there are some for financing, export-orientated industries, empowerment-based for women and youth, financing agro linkages and so forth.
ND: In one of your earlier responses, you mentioned that one of the strategies you can use is to negotiate with your suppliers for credit terms. But, it was our understanding that suppliers are no longer extending industry credit, so what is happening there?
SJ: … a number of companies have strained their supply lines so they are requesting support, to pay off their suppliers. As soon as tobacco money starts coming through, some of their obligations will be paid leaving them in a good standing again so that by the time we get to September, they can request those credit facilities.
ND: What would you want government to do in order to help you get those credit lines from suppliers?
SJ: I think the main thing, since we are already in February, when we go into next month tobacco money starts coming in so if we can start to pay our obligations that is really what is required and companies ensure that by the time we get to September this year they are self-sufficient for their raw materials.
ND: Can you tell me what is the current backlog on foreign currency payments?
SJ: We expect it to be more close to the same ($600 million) because we do not have external credit, not many companies were getting credit extended, and we are only allowed to buy what we have paid for.