Harare – Government has been challenged to address the currency issues affecting the country so as to improve the country’s competitiveness particularly on trade with its regional partners.
According to a research conducted by Economic think tank, Zimbabwe Economic Policy and Research Unit (ZEPARU) which was commissioned by the Ministry of Industry and Commerce in 2015, adaptation of the United States dollar effectively made the country less competitive compared to key trading partners like South Africa.
ZEPARU reported that adaptation of the multi-currency system in 2009, resulted in the economy facing increased competition from South African imports, the country’s main trading partner accounting for nearly 75% of exports and 48% of imports.
While speaking at the ongoing Africa CEO roundtable in Victoria falls under the theme, Achieving an Industrialised Zimbabwe in the context of Accelerated Industrial Growth in Africa (AIDA), United Refineries Limited, CEO, Busisa Moyo said addressing the currency issue is key to improve competitiveness as the country is surrounded by neighbours who use a softer currency, which opens up a door for foreign exports to dominate the local market.
“Currency affects competitiveness, so it is the nab, it is key. We need a currency (manufacturers) that allows us to be competitive because we are surrounded by neighbours that have soft currencies,” said Moyo.
“If this was a warfare, our weapons are inferior in terms of competitiveness and that’s why South African products land here much cheaper same with other parts of the continent because we are trounced because we are in a very expensive environment.”
Zimbabwe adopted dollarisation in February, 2009 following a period of hyperinflation. Although dollarisation came with all bliss like saving the economy from descending into unmanageable chaos, a tragic development was slowly hitting the corporate sector.
Most local companies went into an import overdrive all manner of goods which were once scarce flooded the market.
As a result, most manufacturers are faced with a plethora of challenges in trying to restore basic viability in view of the deluge of cheaper imports. These problems are also compounded by lack of access to appropriate finance for recapitalization, as well obsolete machinery and equipment.
Questions over the direction at which the currency dilemma is going are once more dominating the market.
With the $US in scarcity and the local surrogate currency initially introduced at a 1:1 exchange rate with the $US loosing value, most companies are struggling to keep operations coupled with a high cost of production making locally produced goods expensive on the regional and global scale.
Speaking at the event, Chairperson of the Parliamentary Committee on Public Accounts, Mr Tendai Biti called for a fiscal consolidation, reengagement and demonetization of the bond note.
“We seriously need to prioritise fiscal consolidation and live within our means. We also need to agree on the currency direction,” he said.
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