BY FIDELITY MHLANGA

According to the Zimbabwe National Competitiveness Report (ZNCR) released by the National Economic Consultative Forum (NECF), liquidity cost was high due to transactions by Real Time Gross Settlement, bond notes and mobile money which were higher than those done in dollars.

“Transactions in dollars in Zimbabwe are lower than any other form of payment. For most businesses, getting the dollar from the informal market is the only alternative left as they are not on the import priority list of the central bank,” the report said.

Competitiveness of a country is mainly affected by cost drivers into the production and provision of goods and services.
In terms of cost, the average cost of producing electricity per unit (KWH) from the hydro and thermal power stations is high compared to Mozambique, South Africa, Zambia and Botswana.

Zimbabwe is currently facing power shortages with estimated reliable generation capacity of 1 300MW against a suppressed peak demand of 2 200MW

“The country has the highest tariffs for both commercial users and industrial users compared to other countries in the region. For industrial users, this implies high production costs, a situation that results in Zimbabwe’s products being unattractive in terms of price on the international markets and thus causing a loss in competitiveness compared to the neighbouring countries,” the report said.

It noted that besides the high cost of fuel, cost of transport in Zimbabwe was exacerbated by excessive roadblocks and toll fees with roadblocks creating a fertile ground for bribery and corruption.

The ZNCR report said the country’s minimum wage had remained higher than its competitors except for South Africa.

“Labour remains critical in assessing competitiveness in Zimbabwe both on the basis of cost and productivity. In terms of cost, high minimum wages influence production cost and deter investors,” said the report.

According to the report, water charges in Zimbabwe are above $0,70 per cubic metre while in South Africa, the country’s major trading partner, the first 6 cubic metres (6 000 litres) are supplied for free.

Zimbabwe’s water charges are high due to the high cost of purifying water arising mainly from highly polluted raw water from the main source.

Moreso, the finance cost remains high in Zimbabwe with the average interest rate above 10% which deter firms from borrowing to finance working capital requirements.

Officiating at the launch of the report yesterday in Harare, Industry and Commerce minister Mike Bimha said government had established the National Competitiveness Commission whose mandate was to look at national competitiveness issues meant to make the country competitive after recommendations to set the commission were made in the 2015 report.

“Already, a board for the commission has been put in place and work is currently underway to establish the secretariat,” he said.

He said government was not controlling prices, but it’s monitoring prices of specific commodities of interest.

“I have heard in some other media that government will be introducing price controls and I would like to set the record straight that I did not speak of any price controls. Rather, I said that government was monitoring the prices of specific commodities of interest,” he said.

Early this month, government said it would monitor the price of 16 basic products that include mealie and cooking oil among others.