via High production costs suffocate Zim firms – NewsDay Zimbabwe April 10, 2015
ZIMBABWEAN companies’ borrowing costs are at least twice the level experienced in the region pushing up production costs and making local products uncompetitive, the African Development Bank (AfDB) has said.
Local products have failed to compete in the region as they become uncompetitive. In addition, the influx of foreign products.
AfDB said in a latest report on Zimbabwe that despite various measures intended to rescue the manufacturing sector through the 2015 National Budget Statement, “competitiveness of manufactured products is compromised mainly due to high production costs compared to those prevailing in neighbouring countries”.
“On average, Zimbabwean firms’ borrowing costs (estimated at an average of 28% in 2013) are twice to three times the levels observed in the region,” AfDB said.
“The real weighted average lending rates for corporates and individuals tightened over the period December 2013 to December 2014 with possible negative effects on aggregate output growth as the cost of borrowing for investment and consumption increases.”
AfDB said average cost of commercial electricity in Botswana, Mozambique, South Africa and Zambia was 8,3 United States cents per KWh, which is 57% of what Zimbabwean businesses pay for electricity.
Zimbabwe businesses also pay on average twice as many taxes for imported inputs than neighbouring countries due to high import tariff levels (inclusive of the introduced 25% import surtax),” the bank said.
The country’s manufacturing sector has been under stress from the harsh economic environment. This saw capacity utilisation shedding 3 percentage points, to 36,3% last year from 39,6% in 2013.
COMMENTS
Sad, isn’t it? But did AfDB capture ALL the real reasons for business failure? NO! Zim executives are looting. Their packages are astaunding to say the least and nobody cares. Executives propose hefty non-executive directors’ packages so that non-executive directors can in turn approve hefty executives packages! Let’s bet… executive expenses (all inclusive) account for over 60% of corporate expenses. Trim that whether private or public companies. Be real.
Thirty five years after Independence Zimbabwe, which was a regional food exporter and known as the Breadbasket of Africa, now imports at least 80% of the food it needs to support our population of 14 million people. In clothing and hardware shops you can get anything you want but almost everything says Made in China. In the supermarkets the shelves are crammed with goods which have come mostly from South Africa. Most are three or four times more expensive than in South Africa so some fat cats are making a lot of money at the expense of ordinary people but still we’re left with the identity question: who are we?
Three and half decades after Independence 90% of people in Zimbabwe are unemployed. Everyone from university graduates to school dropouts tries to make a living selling things on the roadsides. The borders are crammed with Zimbabweans going to neighbouring countries to buy goods they can sell on our pavements. Across the country industrial areas have deserted factories and locked warehouses: grass and weeds sprout from concrete while big rusted padlocks on heavy chains tell the story without words of our massive unemployment.
It’s the same on farms where once half a million people worked. Many farms are now empty fields without crops, livestock or fences; the infrastructure’s been looted and buildings are derelict. Even our President of 35 years admitted a few weeks ago that large farms seized from white Zimbabweans and given to black Zimbabweans were not producing anything, they were just being used as status symbols he said.
Please Svosve, it is not looting. In zim it is known as ‘patronage opportunities’.