Anthony Mandiwanza
Prosper Ndlovu, Business Editor
ZIMBABWEAN companies should seek improved competitiveness and produce for export to boost liquidity in the economy and create jobs, Dairibord Holdings Limited chief executive officer, Mr Anthony Mandiwanza, has said.
The prevailing liquidity problem and reliance on imports are a symptom of poor domestic production and a loss of the export edge, he added. An estimated 100 firms or more have closed shop in Zimbabwe in the last decade forcing thousands of workers out of work.
Speaking during the just-ended Confederation of Zimbabwe Industries (CZI) congress in Bulawayo, Mr Mandiwanza said supplying the domestic market without vibrant exports would not improve the economy.
“Zimbabwe is a small economy to benefit from economies of scale. We need to address the symptoms of a deeper problem. This economy is not competitive,” he told delegates.
“Our cost structure is between 45 to 50 percent more expensive than our regional counterparts hence the economy is not growing. Instead we are seeing negative growth.”
Since the adoption of the multiple currency system in 2009, Zimbabwe has been reeling under a trade deficit of about $3 billion with imports of up to $7 billion annually. This has created a cumulative trade deficit of nearly $20 billion in the last six years.
Mr Mandiwanza said urgent pro-active measures must be implemented at all levels, from the Government to private sector, to breathe life into the economy.
“We need to produce for the domestic and regional market. The use of a strong US$ as the main currency creates problems and this needs to be addressed in the medium to long term,” he said.
“We may need to devalue the US$ and reduce all the costs by, say 50 percent. The other option is to play within regional levels so that we are not isolated.”
During the meeting, it emerged that in the yester years, Zimbabwe’s economy thrived on export earnings from regional and overseas markets. Mr Mandiwanza suggested that the central bank adopts a “soft currency that speaks to the market we are targeting”.
Given that close to 60 percent of Zimbabwean imports and exports come from South Africa, the Dairibord boss proposed the adoption of the rand alongside the US$.
At the moment, Zimbabwe uses a basket of currencies that include the US$, pula, rand, euro, yuan, pound and others.
Mr Mandiwanza said the rand could be used as a trade and transaction currency with the US$ used as a reserve currency.
The inequality in the trade field in the region, unless addressed, would continue to suffocate the country’s economy and make it vulnerable to cheap imports, he said.
CZI and a number of economic experts have also been pushing for internal devaluation and the adoption of the rand. However, RBZ Governor Dr John Mangudya has warned that doing so would create problems in the exchange market.
Rather, he suggested that all efforts be directed at improving production output saying the country’s problems were not a currency issue by a production one. — @ProsperNdlovu.