Surging forward with the new normal

02 Jul, 2017 - 00:07 0 Views
Surging forward with the new normal Our financial sector has been identified as a key strategic partner in financing the economy from being a primary producer to a producer of diversified manufactured products and services.

The Sunday Mail

Hon E.D.  Mnangagwa
The following are remarks made by Vice-President Emmerson Mnangagwa at last week’s 2017 Congress of the Zimbabwe National Chamber of Commerce in Victoria Falls.

I am delighted to have been invited to officiate at this annual congress where delegates have convened to deliberate on issues that pertain to the socio-economic development of our great country.

I am grateful to the Zimbabwe National Chamber of Commerce for yet again inviting me to this event, which has now become an important feature in the country’s business calendar. This year’s theme, “Consolidating the New Normal Economy through Policy Reforms”, is germane as it dovetails with Government’s multifaceted initiatives which seek to maximise the opportunities available in the current environment from both a national and global perspective guided primarily by the Zimbabwe Agenda for Sustainable Socio-Economic Transformation.

As Government, we are desirous that Zimbabwe becomes a hub of industrialisation, commerce and international trade in the quest of achieving an “empowered society and a growing economy”. According to the June 2017 Global Economic Prospects Report, the World Bank projected GDP growth of 2,3 percent for Zimbabwe this year up from the initial 0,7 percent projection.

To this end, all Zimbabweans have a collective obligation to harness their strength, competencies, skills, as well as the country’s factor endowments to meet or surpass this growth potential.

I am aware that in your 2016 annual congress you came up with critical action points for the success of our economy. Among these were matters to do with the role of Parliament in economic transformation; ease of doing business; perspectives and realities on investing in Zimbabwe; managing costs in a deflationary environment as well as corporate leadership reforms.

Cognisant of stakeholders’ concerns, Government remains seized with the crafting of an enabling environment which ensures the success of business, industry and commerce whilst guaranteeing that the majority of our citizens are masters of their own destiny, who are empowered and enjoy a high quality of life in line with the Zim-Asset goal of creating “an empowered society and a growing economy”.

We always wish for a society where socio-economic development and investment do not only end up in major cities, but cascade down to the most remote and vulnerable places in our country. Furthermore, it is without doubt that robust economic reforms, good corporate governance, hard work and diligence are essential ingredients to revive and sustain an upward economic growth trajectory, while building competitiveness, inclusivity and sustainability.

To this end, Government continues working on improving exports through the Rapid Results Initiative on the Ease of Doing Export Business. In the same vein, various reforms across the entire private and public sector are being implemented to improve the ease of doing business and create a vibrant industrial and export sector, anchored on productivity.

The main objectives of undertaking the reforms are to: (i) Improve the business environment in order to boost domestic and FDI; (ii) Improve performance of the public sector institutions in delivering quality service to the people; (iii) Reduce the cost and enhance the ease of doing business; and (iv) Create value for money.

These reforms are based on 10 global indices of doing business. To date, significant progress has been made in drafting eight pieces of legislation, which include the National Competitiveness Act (Chapter 14:36) (No.6 of 2017), Deeds Registries Amendment Act, 2017 (No.8 of 2017) and the Judicial Laws Amendment Act (Ease of Settling Commercial and Other Disputes) Act, 2017 (No.7 of 2017), among others, and identifying thirteen (13) Statutory Instruments (Sls) for amendment. Out of these Sls, eleven (11) have been amended and gazetted, with only two. (2) still outstanding.

Currently, there are 9 Bills which have been drafted to ease the process of doing business in Zimbabwe. These are at various stages of completion and provide major tenets to improving the ease of doing business in Zimbabwe.

The Bills aim at improving the investment climate and lure prospective investors to our beloved nation. The external sector still remains a threat to a strong recovery largely due to weak exports leading to an unsustainable trade deficit, although imports have been coming down of late due to the positive effects of Statutory Instrument 64 of 2016.

To address some of these challenges, Government has taken the following measures:

(i) Enacted Special Economic Zones Act in December 2016 which will boost investment through the imminent establishment of Special Economic Zones.

To date, Chinese investors have already shown interest in investing in the special economic zones following the Zimbabwe-China Zhejiang Province Investment Conference where memoranda of understanding were signed under which the Chinese will explore investment opportunities in Zimbabwe and construct an industrial park.

I am happy to announce that ever-since the signing into law of the bill, we have had numerous enquiries from investors who are interested in investing into various sectors of the economy under the SEZs facility.

I, therefore, invite bona-fide local and foreign potential investors to come on board and seize the vast trade and investment opportunities available in various sectors and engage in projects that yield fair returns whilst benefiting our country and its people, in a win-win situation in terms of the country’s statutes.

Currently, we have three pilot special economic zones which are Victoria Falls Integrated Tourism Park, Bulawayo Industrial Hub and Sunway City Integrated Park in Harare.

(ii) Secondly, Government is carrying out austerity measures to restructure the budget by reducing the wage bill to avoid crowding out capital expenditure and social spending. This will leave the fiscal space to ensure service delivery and restrain unnecessary borrowing.

(iii) Government is also working on import contraction while incentivising exports through various exports incentive schemes. In that regard, we have enacted Statutory Instrument 64 of 2016 which has temporarily removed 43 products from the Open General Import Licence.

The implementation of SI 64 of 2016 has resulted in the resuscitation of a number of companies and the setting up of new companies and/or plants in a number of supported sectors. In this regard, I urge prospective investors to take advantage of this regulatory initiative where they would be guaranteed a market for their products.

To date, several companies have taken advantage of SI 64 of 2016 and established plants in Zimbabwe, being assured that goods which are produced locally are not on the general import license.  In addition, supply side stimuli measures are being implemented in various sectors of the economy by the Government.

These include Command Agriculture (Special Programme on Maize Production for Import Substitution and Grain Importation); recapitalisation of mines through Joint Ventures; and financing arrangements to augment local companies’ recapitalisation in order to increase domestic supply and exports.

Overally, economic activity in the near term will depend to a large extent on how quickly the measures outlined above are implemented, particularly measures to fully operationalise special economic zones, boost agriculture and increase export. The manufacturing sector cannot be ignored in our quest to turn around the fortunes of our economy. Accordingly, our thrust as a nation should be centred on restoring the sector’s contribution to GDP as well as increasing exports earnings.

In this regard, the private sector should be the engine for economic recovery and growth in Zimbabwe. Regarding competitiveness, Zimbabwe’s production costs are considerably higher as compared to other regional and international producers, thereby making it difficult for some locally manufactured products to compete on the global market.

The costs of production are mainly compounded by high costs of capital, labour, electricity, transport and logistics. The latest 2016 World Bank Ease of Doing Business Report shows that Zimbabwe’s competitiveness remains low. To that end, Government has replaced the National Incomes and Pricing Commission with the National Competitiveness Commission, who’s Bill has been approved by Parliament and was recently assented to by His Excellency, the President.

The commission shall be responsible for, among other functions, developing, co-ordinating and ensuring implementation of key policy reforms, strategies, and initiatives, that will enhance Zimbabwe’s global competitiveness.

The commission shall also be reviewing all existing and new business regulations to ascertain their impact on the cost of doing business and recommend amendments or repeals where appropriate in order to enhance competitiveness.

Our financial sector has been identified as a key strategic partner in financing the economy from being a primary producer to a producer of diversified manufactured products and services.

The sector is diversified and well integrated with the rest of the Zimbabwean economy, exhibiting, particularly, strong backward and forward linkages with agriculture, mining, construction and commerce.

Zimbabwe’s financial sector is well known for the diversity of its money and capital markets products. It provides equity capital, trade and credit finance, mortgage loans, financial intermediation and drives key sectors like agriculture, manufacturing, mining, tourism, infrastructure development and small and medium enterprises, among others.

Industry, commerce, insurance, retailing, wholesaling, agro- processing, manufacturing, domestic and international trade thrive on a vibrant financial sector characterized by depositors’ confidence, depositors’ funds protection, performing loans and reasonable lending rates.

Although there have been significant strides in the use of plastic money, of late many of our peri-urban and rural folk are yet to embrace this mode of transaction. The transaction and precautionary demand for money continue to surge every day as evidenced by long and winding queues at our banks.

This cumulative demand for cash will be tamed to zero if the cost of transacting using debit cards is negligible. However, I want to recognise those of our financial institutions who are making efforts to get more point-of-sale machines with a view to encouraging financial inclusion through use of plastic money.

Charges on the use of plastic money are considerably high as compared with those of other countries within the region. I therefore urge our banks to consider reviewing these transaction costs downwards. The advantages of the use of plastic money are innumerable, and I thus urge our businesses to fully embrace use of ICT solutions as we seek to consolidate the new normal economy through policy reforms.

In conclusion, I would like to urge the captains of industry and commerce to continue to adhere to good corporate governance and uphold progressive leadership and management styles that will not only promote a thriving and vibrant industry but also promote Zimbabwe as a preferred investment destination.

I also want to challenge economists and business analysts to craft growth and development models which support Government programs and initiatives in policy formulation, co-ordination, monitoring and evaluation.

Zimbabwe should make an effort to accelerate the shift of growth models and economic restructuring, and endeavour to achieve a transition of its products from “made in Zimbabwe” to “created by Zimbabweans.”

Only last week, I expended positive energy in officiating at the Ease of Doing Business in Zimbabwe Conference in Sandton, South Africa, which was organised by the Embassy of Zimbabwe in South Africa, the Ministry of Macro-Economic Planning and Investment Promotion and the Zimbabwe-South Africa Forum under the theme “Demystifying the myth: Doing business in Zimbabwe”.

The conference showed that there is a lot of appetite for investing in Zimbabwe and I therefore call upon you to seize the opportunity by entering into partnerships with such investors.

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