By Cloudine Matola
Government says it has not made progress in terms of retooling industry but will now focus on providing companies with funding to boost raw material procurement, a government official has said.
Industry requires US$500 million to retool and rehabilitate machinery.
Zimbabwe is facing challenges accessing foreign currency owing to a protracted economic crisis.
Industry and Commerce minister Nqobizitha Mangaliso Ndlovu on Monday told businessdigest on the sidelines of a breakfast meeting held in conjunction with Alpha Media Holdings (AMH) in Harare that the government was now prioritising assisting industry access capital.
He said optical allocation of foreign currency was the key to industry’s survival.
This comes as government availed ZW$30 million through the Industrial Development Corporation of Zimbabwe (IDCZ) as working capital for the industry.
“Currently government availed ZW$30 million through IDCZ but predominantly this will go towards working capital. We need to find balance where exporters are able to offload their foreign currency to local manufacturers or other critical stakeholders for productive use, which is why we have the interbank market which is continuously being fine-tuned, that is where the foreign currency is accessed,” said Ndlovu.
“Foreign currency, I have always said we do not have a crisis of foreign currency generation. We have enough but it is a crisis of foreign currency allocation. Optimal allocation or access of the foreign currency is what needs to be continuously looked into because that money belongs to exporting companies mostly over and above remittance and other sources but the bulk of it is from exporters.”
He said inflation has been the major driver of low production in the country.
Zimbabwe’s year-on-year inflation for June 2019 rose from 97,85% in May to 175,66% in June.
“Inflation is the major driver of low production currently because demand is low and it’s a collective effort that is needed.
“Business has to review prices downwards and government has no business pressing prices down. That should be done by the business sector,” Ndlovu said.
“The driver in the few months was the exchange rate issue, the multi-currency system, which is why as government we intervened and we now have mono-currency regime. So we continuously review policies to respond to challenges that are emerging but currently we have to focus on production. With more production, generally unit cost goes down and we expect prices to go down.”