Conrad Mwanawashe in Bulawayo—
GOVERNMENT will by August this year produce a National Competitiveness Assessment Report which is expected to provide strategies to clean the country’s image as a high cost production centre. The National Competitiveness Assessment Report, which is being co-ordinated by the National Economic Consultative Forum, is a snapshot of a country’s actual and evolving competitiveness, presented through credible data and its interpretation.
Vice President Emmerson Mnangagwa told the International Business Council that some of the competitiveness challenges that Government, the private sector and other players should deal with include tackling unemployment, driving productivity, sustaining and deepening competitive advantage in key sectors, broadening the export base, delivering further improvements in cost competitiveness and restoring macro-economic stability, among others.
“Generally, Zimbabwe is a high cost production centre compared to regional economies like South Africa,” VP Mnangagwa said.
“In order to understand this phenomenon and come up with ways of improving our competitiveness, the National Economic Consultative Forum is co-ordinating the production of a National Competitiveness Assessment Report which is expected to be completed in August 2015,” he said.
Competitiveness encompasses a diverse range of factors including costs, productivity, education and training, entrepreneurship and innovation, social, economic and technological infrastructure and the taxation and regulatory regime.
“Competitiveness is underpinned by stable public finances, a properly regulated and working banking system and a broad vision for a prosperous economic future,” said VP Mnangagwa.
The competitiveness report is one of the many initiatives Government has adopted to improve the country’s doing business environment.
VP Mnangagwa also said a mix of local investment and foreign direct investment will provide the capital and operational requirements of the manufacturing industry, a key sector in the economy.
Addressing the same business conference, the Deputy Minister of Industry and Commerce, Chiratidzo Mabuwa, said the major causes of uncompetitiveness of local companies are the high costs of production emanating from the high mark-ups to sustain high overheads epitomised by the high utility tariffs, finance charges as well as wages and salaries. Local wages and salaries are said to be higher than those obtaining in neighbouring countries and beyond.
Deputy Minister Mabuwa said the worst affected sectors include food, pharmaceuticals, leather, construction, clothing and textiles industries among others. She said Zimbabwe used to produce 7 000 high quality products for its domestic and export market.
“However, for the past four years after the introduction of the multi-currency system, there has been a proliferation of imported goods and commodities on the local economy which has had a direct effect on the declining capacity utilisation within industry which is projected to drop by a further 6 percent to an overall industry average low of 30 percent by year end,” Deputy Minister Mabuwa said.
“The combination of uncompetitive factors has continued to put pressure on the balance of payments position of the country as imports of finished goods have become the order of the day leading to company closures and job losses,” she said.
However, it’s not all gloom and doom as there are pockets of recovery with some industries doing relatively well and continuing to expand and create employment.
“In order to effectively boost Zimbabwe’s competitiveness, capacity utilisation and the stimulation and promotion of exports, some fundamental issues need to be addressed which include the rehabilitation and development of infrastructure, the stimulation of the domestic goods markets, the creation of an efficient labour market and the development of a vibrant and competitive financial market,” the deputy minister said.
Since Zimbabwe has not improved on its ranking on the World Bank Ease of Doing Business Index from the 2013 and the 2014 reports, Government is taking a holistic approach in identifying and implementing various measures to improve the country’s ranking.
“May I assure the business community that Government is committed to reducing the cost of doing business in Zimbabwe,” she said.