Cost of money unsustainable: Ndhlukula

THE Zimbabwe National Chamber of Commerce (ZNCC) will hold its 2018 annual congress in Victoria Falls from June 27 to 29, 2018 under the theme Enterprise Development, Corporate Entrepreneurship and Sustainable Growth. NewsDay (ND) business reporter, Mthandazo Nyoni, speaks to ZNCC president, Divine Ndhlukula (DN) over the congress’ main thrust, among other issues. Below are the excerpts from the interview.

By Mthandazo Nyoni

ND: What are the key issues that you would like to address during the annual congress and general meeting?

DN: Our congress this year will be held under the theme Enterprise Development, Corporate Entrepreneurship and Sustainable Growth and the main thrust is to facilitate dialogue between various stakeholders on issues affecting the Zimbabwean economy, with resolutions from the annual event set to be presented as input into policy formulation for improving the business environment to foster economic growth.

We will also be hosting international delegations from Japan and the Southern African Development Community region.

Business-to-business sessions will be held between Zimbabwe and Japanese companies.

These will provide an opportunity to share relevant information, experiences and areas of synergies between Zimbabwe and Japanese companies.

There will also be deliberations on the Japan Economic success model, Africa Continental Free Trade Area and the Zimbabwe Economic Outlook.

ND: How did the manufacturing sector perform during the first quarter of 2018?

DN: Capacity utilisation has been constrained by high production costs and shortages of foreign currency. However, business has remained resilient despite these challenges.

Industry is failing to import raw materials because of foreign currency shortages and delays in processing foreign payments and this has had an impact on production levels.


ND: What major challenges did the sector face in the period under review?

DN: Cash shortages, foreign currency shortages to import raw materials for the necessary inputs, high cost of production and transportation — as a result of depleted basic physical infrastructure required such as good roads, and good rail transportation facilities, informal sector — business continues to face competition from unregistered informal sector players competing unfairly with the registered formal sector players who offer similar products/services, but with added fiscal obligations

ND: You spoke about the foreign currency issue, how has that impacted on businesses?

DN: Demand for foreign currency remains high given that about 90% of the products have an element of imports as an input (raw materials).

Foreign currency challenges are a symptom of fundamentals which need to be addressed which include fiscal deficit, current account deficit, and confidence deficit.

The simple fact that the economy is immersed in biting foreign currency shortages characterised by a multi-tier pricing system means the cost of money has become both unsustainable and unpredictable.

ND: What is your outlook in terms of capacity utilisation?

DN: We expect capacity utilisation to improve given the government’s commitment to improve the national macro-economic conditions and ensuring an improvement in the supply of scarce foreign currency resources required to stimulate domestic production.

However, if foreign currency challenges persist this will continue to weigh on the sector’s production capacity.

Meanwhile, building linkages through the Local Content Policy (currently being developed) will help promote local value addition through linkages and utilisation of domestic resources.

ND: How much does the sector require for recapitalisation?

DN: Considering that quite a number of manufacturing companies have over the past years shut down, with some relying on obsolete machinery to produce, there is need for billions of dollars to support re-tooling, adoption of new machinery and technology.

There is need for the sector to embrace modern technology and machinery in order to produce competitive goods and services of high quality at low costs.

Failure to recapitalise will see our products continue to face stiff competition from foreign products as some of the products come at cheaper prices.

ND: How has been your first term as ZNCC president?

DN: The year has been characterised by challenges affecting business as outlined above.

However, despite the challenges, ZNCC has made large strides in championing the ZNCC mandate of developing, promoting, and lobbying for business.

ND: What have you achieved so far?

DN: As part of our achievements, we continued to be the “Voice of Business” engaging government on various areas weighing business through lobbying, business advocacy, information dissemination, collaboration and facilitation with all stakeholders.

We have also played a role in attracting investment and fostering private sector partnerships, by leading a business delegation to India which culminated in the opening of a Zimbabwe Investment Office in Gujarat, India.

We also led a business delegation to Rwanda and hosted a business delegation from Sweden.

This has seen a few of the local companies forging partnerships with the foreign companies as we encourage that approach as there are many brownfield investments in need of capital and technology.

3 Comments

  1. Progressive Zimbabwean

    Some of us have shouted hoarse about the cost of money. You would think Mangundya has an interest in some of these institutions. This is more so considering the harm being inflicted by micro finance institutions in the economic and social fabric of the country. How do you explain a rate of 5% per month as interest in a country whose annual inflation rate is around 4%. You are talking of an annual interest rate figure of around 70% per annum if not more and that is simply not sustainable. In a robust economy such financial institutions would be expeditiously investigated, punished and closed for the good of the economy. The reason why banks are posting super profits in the midst of poor performance by all other sectors is because “Dr” Mangundya is simply inept and leads an inept bunch of pseudo economists. The earlier we realise that the better.

  2. This so called Dr Mangundya is so inept. Does he qualify for the job? Before him we had this idiot called “Dr” Gideon Gono, a man who single handedly destroyed the economy of this country. The idiot was replaced by another imbecile called “Dr” Mangundya with his useless bond notes and coins. Instead of supervising these corrupt banks which are cheating the public, this fool of a reserve bank governor spends time waffling about his bond money. The level of corruption in the banking sector is shocking because the banks are not supervised. There is an artificial shortage of cash because these banks channel the cash into the black market. The foolish governor does nothing. How did he get that job in the first place?

  3. Unfortunately if zanupf wins this will be a daily cry for the next 5 years. Zimbabwe is very good at ‘lets give them another chance’ until a whole generation is wiped out the next generation comes and say lets ‘give them another chance’ and so on. By then vamwe vanenge vatove nema flying trains.

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