Business bullish about new policies

11 Sep, 2022 - 00:09 0 Views
Business bullish about new policies

The Sunday Mail

Oliver Kazunga

BUSINESS executives are confident the obtaining macro-economic stability achieved through a series of recent policy interventions will continue to hold in the medium to long term.

In recent months, the Government announced a cocktail of fiscal and monetary measures to tame the local currency depreciation and resurgent inflation.

The policies were meant to curb speculative behaviour and arbitrage.

The interventions include the introduction of gold coins to preserve value, as well as the directive for all Government ministries, departments, agencies and local authorities to collect fees and levies in local currency, except in specified instances.

In interviews on the sidelines of the just-ended Confederation of Zimbabwe Industries (CZI) annual congress in Harare, captains of industry expressed confidence that exchange rate stability would continue.

“Clearly, the most critical enabler for any kind of business and, therefore, economic growth will be macro-economic stability. We very much welcome the recent stability in the macro-economic environment in exchange rates. It’s a very welcome development,” said Schweppes Zimbabwe managing director Mr Charles Msipa.

“It’s a critical enabler for us to plan for our business recovery and growth — absolutely indispensable.”

He, however, noted there was need for a more comprehensive exchange rate management system.

“Right now, many businesses in the manufacturing sector are still not kind of generating or getting enough foreign exchange for their raw material imports.

“I think we can consolidate that stability by making it more sustainable and having a sound exchange rate management system going forward,” he said.

Shepco Industries group chief executive officer Dr Shepherd Chawira said: “Government seems to have put in measures that will rein in inflation.

“The 200 percent interest rate increase is going to discourage lending for speculative purposes, the gold coins have taken away some excess liquidity and the control the Government is doing on contractors in terms of the payouts and also managing the whole value chain of Government contractors has really brought these positive steps,” he said.

“We are happy that the convergence gap is narrowing between the parallel market and the official interbank exchange rate, which is something very positive that has brought some stability in terms of inflation.”

Economist Ms Wendy Mpofu said the prevailing stability was sustainable as long as the Government continues to monitor how the market is responding to the interventions.

“I think the prevailing economic situation in terms of a stable environment is sustainable going forward.

“What is critical is for policymakers to continue monitoring how the market responds and possibly tighten any loopholes that could be the conduit for reversing the gains so far achieved as a result of the interventions by the Government,” she said.

Meanwhile, Finance and Economic Development Minister Professor Mthuli Ncube, who was guest of honour at the CZI annual congress that ended on Friday, officially launched a US$200 million facility for raw materials and equipment.

The facility was arranged by CZI in partnership with Loita Capital.

CZI president Mr Kurai Matsheza said they have been talking to Loita Capital for quite some time before striking the latest deal.

“They have not only been talking to us, but the Reserve Bank as well, seeking authority on how it (facility) is structured here through the formal exchange authorities,” he said.

Loita Capital chairperson and chief executive officer Mr Justin Chinyata said: “The reason we are here is that we have our trading platform, and part of that trading platform concept is that we have also embedded a financial model into it which will help importers and exporters (from Zimbabwe) in their funding requirements. And the target initially is for the US$200 million which will be split between trade and the investment component,” he said.

“Most of the folks that we have worked with have tended to be very professional, especially in the export sector,” he said.

In his address, Prof Ncube reaffirmed the Government’s commitment to support industry.

Capacity utilisation rose to 57 percent last year from 47 percent in 2020.

“We are seeing an increase in domestically manufactured goods . . . and we as Government are committed to supporting the value chain,” said Minister Ncube.

The country’s economy is considered to be in good shape.

Zimbabwe had a current account surplus of US$340,5 million in the first half of this year compared to US$97,2 million in the corresponding period in 2021.

This, Prof Ncube said, is likely to support the value of the local currency.

“The risk of the currency is other factors but not this one, so the surplus continues to be driven by the strong inflows in terms of the Diaspora inflows, as well as some growth in exports,” he added.

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