Industry’s take on bond notes, economic reforms

17 Sep, 2016 - 23:09 0 Views
Industry’s take on bond notes, economic reforms Minister Patrick Chinamasa

The Sunday Mail

Busisa Moyo CZI President
Finance and Economic Development Minister Patrick Chinamasa and Reserve Bank of Zimbabwe Governor Dr John Mangudya recently presented the Mid-Term Fiscal and Monetary Policy statements, respectively. Below we publish the views of business leaders on key interventions in both statements.
Reserve Bank of Zimbabwe Governor Dr John Mangudya gave ample warning and comprehensive explanations on the introduction of bond notes.

Industry accepts the bond notes in light of the fact that they will operate alongside the multi-currency system, that there will be an independent board to ensure correct matching to bonds and that no one will be forced to use them or accept them.

As long as the bond notes are accepted by the transport sector and retail sectors, we should see an easing of cash shortages.
The denominations of $2 and $5 are small and fall into the “change” category, along with the bond coins already in circulation.
The bond notes of small denominations are likely to assist with trading activities, facilitate in agricultural markets, the wholesale and retail sector, the transport and communication (airtime) sector in particular.

The Monetary Policy was fair and the Governor sought to tackle the issue of competitiveness to spark off an increase in exports by referring to the issue of internal devaluation or an alternative mechanism to lower internal costs through monetary levers available to the central bank.

It is quite clear that Monetary Policy management is more effective in light of disagreements in the area of Fiscal Policy.
However, debt repayment remains an outside (matter) that requires boldness and firm strategies in both fiscal and monetary management.

We need to do what is right and not necessarily what is convenient.
We will give a full review and analysis next week after our economists have fully studied the documents.

Meanwhile, industrialists and economists have lauded Government’s commitment to regulatory and policy reforms meant to ease the processes of starting businesses in Zimbabwe for domestic and foreign investors, reports The Sunday Mail’s Livingstone Marufu.

Experts say deliberate reforms to ease the way of doing business has huge potential to strengthen Zimbabwe’s global competitiveness. The World Bank recently revealed that the ease of doing business in Zimbabwe is improving as evidenced by its improved ranking from 177 in 2015 to the current 155th place global ranking.
The country hopes to break into the top 100 by year end.

Since the beginning of the year, Government has instituted at least 13 legislative reforms which include amendments to the Companies Act, Reserve Bank of Zimbabwe Act, Movable Property Security Interest Act and Deeds Registry Act.
The Confederation of Zimbabwe Industries says the reforms have already begun to eliminate the regulatory, transactional and administrative burden borne by businesses operating and seeking to operate in Zimbabwe. CZI vice-president Mr Sifelani Jabangwe told The Sunday Mail, “We are in full support of the Government’s economic reforms as the move will improve the investment climate conditions in the country since they will be less administrative burden and less regulatory issues.

“More investors will feel free to transact in that kind of environment where the investment climate encourages investors to come and do business in the country.

“Some of the economic reforms have pushed the country 14 or 15 places upwards as far as ease of doing business rankings are concerned, hence huge strides are being made. This shows that the Government is making a big step towards the positive trajectory of our reform initiatives and improving of investment climate.”

The reforms will reduce bureaucratic processes in starting a business while protecting minority investors, enforcing contracts and resolving insolvency issues, access to credit facilities, tax regimes and property registration. In the 2016 Mid-Term Fiscal Policy Review in Harare last week, Finance Minister Patrick Chinamasa said Zimbabwe has huge potential to attract investment.

“Given our strategic geographical position, abundant natural resources, diversified industry, supported by well-developed infrastructure as well as a highly skilled labour force, we have much potential to attract foreign direct investment for rapid development of our economy,” he said.

“In this regard, the rate and level of investment licence renewals also indicate high interest in investing in the country. This requires that we concretise on all opportunities for investment, including all investment applications approved by the Zimbabwe Investment Authority.”

Minister Chinamasa said during the first half of 2016, most of the US$305,6 million investment applications were in manufacturing and mining.

Legislative reforms target the Companies Act and ancillary legislation, whilst another facet deals with reforming the procedural, time and cost elements of doing business. Economist Mr Edgar Muhoyi said as the country celebrates improvement in the ease of doing business rankings, there is need to assess what led to the improvement in the investment climate and build on that.

“It’s a positive development that we have moved high up the ladder. The sooner Zimbabwe becomes a bonafide member of the global economic family, the better. Zimbabwe needs serious investment in all economic sectors and the above recommendation may unlock that avenue,” said Mr Muhoyi.

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