Source: Sharp dip in economic output: CZI – The Zimbabwe Independent August 16, 2019
CONFEDERATION of Zimbabwe Industries (CZI) president Henry Ruzvidzo says the economic crisis gripping the country will result in a sharp dip in industrial productivity this year, significantly reversing gains realised in the last two years.
BY LISA TAZVIINGA
Ruzvidzo’s sentiments come at a time President Emmerson Mnangagwa is struggling to steady the ship amid galloping inflation which has reached 175,66% as at June 31.
Finance minister Mthuli Ncube responded to the country’s worsening economic crisis last week by blacking out inflation statistics for the next six months, while presenting his mid-term 2019 budget two weeks ago.
Protracted power outages which have rocked the country in the past three months have compounded the situation, pushing the already ailing economy into paralysis. Reliable and affordable electricity is a key enabler in the productive sector.
Recent CZI figures indicate that local industries have been losing between US$150 to US$200 million every week due to power cuts alone.
In an interview with the Zimbabwe Independent this week, Ruzvidzo said the country is facing a gloomy production outlook.
“I think it (2019 outlook) will certainly be worse than 2018. In fact, in 2017 and 2018 our manufacturing output started to go up and it’s a pity that we have taken a step backwards. Hopefully, as things stabilise, as has been indicated by the government, we can begin to turn around again, but definitely the 2019 figures will be poor,” Ruzvidzo said.
He added that local companies are also suffering from poor competitiveness on the regional markets, an observation he made during his visit recent visit to Tanzania where he attended the annual Sadc Industrial Week in the East African country’s commercial capital, Dar es Salaam.
“What we saw in Dar es Salaam is vibrancy; one that we do not see here anymore and a clear signal that the country is on its way up. Starting at the airport terminals and their aircraft. The same with Kenya. In fact, Kenya Airways is now really big. That gave me the sense that we have been left behind so much,” Ruzvidzo said.
“Taking into account other people from the region, there are a lot of development opportunities in their countries and we feel left behind, particularly in industry where we are performing poorer than we used to.”
He said most companies have suffered huge losses in past three months when load shedding has been at its peak, with companies getting electricity for only six hours per day.
Many companies, Ruzvidzo said, now risk losing their export markets to regional competitors as they could not perform whilst some have scaled down operations or completely shut down.
“I don’t have any figures yet, but would not be surprised if a number of companies have shut down. I think the issue of electricity was a lesson learnt, more could have been done to urgently respond to the issue of power,” Ruzvidzo said.
“We need to address fiscal issues, monetary issues first. What industry needs is access to financing and markets, both domestic and export markets. Another issue to be addressed is the ease of doing business. Zimbabwe is still a very difficult environment to do business in, both from a policy perspective and from a regulatory perspective. I think once those things begin to be addressed then industry can begin to look up again,” he said.
Ruzvidzo cited lack of investor confidence as the major challenge in their attempt to secure both local and foreign lines of credit.
“Basically our role has been to encourage government put in place confidence-building mechanisms. We know there is a Staff-Monitoring Programme that has been placed in the IMF recently, as part of the rebuilding of confidence in our financial sector which when it happens will be able to be accessed by businesses including the private sector.
There have also been internal issues such as repatriation of profits. I think people who invest in the country would want to repatriate whatever profits and if it is loans they would want to repatriate the payments for those loans. There is need to guarantee investors that they will get their money back. The country lacks confidence, not only from our people here but even from other countries,” Ruzvidzo said.