EDITORIAL : Show the commitment
Last week, Finance and Economic Development Minister, Patrick Chinamasa, said measures put in place by government to turnaround the failing economy had begun to bear fruit, as he responded to concerns by legislators over his mid-term fiscal policy review made in July.
The Parliamentary Committee on Finance and Economic Development, as well as individual members of Parliament, raised concern over a number of issues.
In particular, they expressed concern over what they perceived to be failure by the mid-term fiscal policy review to come up with bold strategies to retool the manufacturing industry and a 25 percent customs duty on fertiliser meant to protect local fertiliser-making companies.
There were fears that the duty would make fertiliser unaffordable, thereby negatively impacting on the agricultural sector and therefore the national economy.
Chinamasa sounded robust in his defence of his fiscal policy review statement, arguing that government had taken a number of measures to recapitalise local manufacturing companies.
He said local fertiliser production was in fact expected to increase from current capacity levels of 30 percent to 44 percent by year end, thereby enabling the fertiliser companies to recover their costs over higher production bases.
This, he said, was expected to result in a reduction in prices.
“I already have a commitment from the fertiliser manufacturers that current prices are expected to decline by 20 percent due to increased volumes of production,” said Chinamasa.
“Let me add that recently I have received a communication from ZFC (Zimbabwe Fertiliser Company) that it is now already on 100 percent production capacity and this is encouraged by the measures that we have so far taken.”
To help the manufacturing sector, Chinamasa highlighted that government has undertaken the following:
l Facilitating a number of lines of credit, for example, from the Preferential Trade Area Bank, Afreximbank and many other institutions;
l Improving the investment environment by clarifying and resolving issues around indigenisation, bilateral investment protection agreements, doing business reforms, among others;
l Issuance of guidelines on setting lending interest rates as recently announced by the Reserve Bank of Zimbabwe in the Monetary Policy Statement; and
l Resolving the external debt overhang through various engagements with both bilateral and multilateral institutions and creditors including the International Monetary Fund, World Bank and African Development Bank.
We believe government’s initiatives so far are commendable, but not sufficient enough to stem the haemorrhage in the economy. We believe there are policies that should completely be abandoned rather than just clarified, and government bureaucracy, one of the major stumbling blocks to investment and investor confidence, should be dealt with decisively when implementing measures related to easing doing business in the country.
Potential investors have clearly expressed their apprehension over the lack of property rights in the country, and policy inconsistency.
These are key issues and government should demonstrate commitment to reassure investors and lenders.