The Sunday News
CONFEDERATION of Zimbabwe Industries (CZI) president Mr Busisa Moyo has said local banks were charging interest rates that were six times higher than their counterparts in South Africa, a situation that has left local companies less competitive on the international market.
Mr Moyo said local companies were operating under difficult conditions where they were charged high taxes, levies and interest rates by the local banks.
“The local banks interest rates are still between 12 to 18 percent and it’s short term money which you cannot use to retool and to get more efficient equipment to be able to be competitive. It’s a challenge that we need to look at. Our South African counterparts are borrowing at between three to four percent interest. So an engineering company in South Africa and another one in Ruwa or Belmont are operating at different levels. Those costs end up showing on what we produce,” said Mr Moyo while addressing delegates who attended the Mine Entra exhibition which ended in Bulawayo on Friday.
He said local companies had the highest wage costs compared to companies in the region, a scenario which was also increasing the costs of production.
“Zimbabwe’s wage costs are 138 percent higher than its regional peers but has high unemployment,” he said.
He said for example, in Malawi the basic salary for an industry worker was $25 while in Zimbabwe it was around $230.
“It’s difficult for us to supply the mining competitively when our input costs are higher. So until we attend to those inputs costs it’s very difficult to stay in business and supply competitively, it’s a challenge that we need to look at,” said Mr Moyo.
He said Zimbabwe companies were suffering from lack of capital yet ironically it was spending $3 billion every year on imports.
“The $3 billion worth of imports that we spent is money that is coming from Zimbabwe, so the money is there. People say there is a liquidity challenge but I don’t believe that because year after year we have been taking out this $3 billion and where is it coming from? We must have it somewhere,” said Mr Moyo.
He said there was $4 billion circulating in the banks at the moment which could be used to capitalise local companies.
Mr Moyo said the remaining companies should be supported as they had proved that they could survive under difficult conditions.
“If a company is still open, still employing and producing products it is a survivor. So whatever company is alive now is worth saving and worth looking at what are the binding constraints so that at least we stop the bleeding and stop company closures,” said Mr Moyo.
