CZI calls for urgent implementation of internal devaluation

22 Jan, 2017 - 00:01 0 Views

The Sunday News

Bianca Mlilo, Business Reporter
INDUSTRY representative body, Confederation of Zimbabwe Industries has called for the urgent implementation of internal devaluation due to the pressing need to generate foreign currency.

Internal devaluation is an economic policy option whose aim is to restore the international competitiveness of a country mainly by reducing its labour costs and increasing productivity, while maintaining the value of the exchange rate.

CZI president Mr Busisa Moyo said concerning the implementation of internal devaluation, the business apex body was looking at a proposal that incentivises cash and nostro deposits and levying withdrawals and nostro withdrawals, which he said would have the effect of reducing costs of locally manufactured products.

He also said there was a need to have a programme of reviewing and lowering key cost drivers to productive sectors to gain export competitiveness, for instance power, rates, rentals, interest rates and professional service fees, as well as the cost of living.

“It is needed urgently as our foreign currency coffers are dry and we urgently need to generate foreign currency so we can import raw materials and other essentials,” said Mr Moyo in e-mailed responses.

“Internal devaluation is a once off mechanism supported by ongoing programmes of benchmarking of key cost drivers with other countries (say South Africa and in rand terms) cost reduction, restructuring and directionally coherent policies.”

On buying local goods, an initiative dubbed “Buy Zimbabwe Campaign”, Mr Moyo said it had been proved that if supported, a lot of sectors like cement, milk, beverages were able to meet local demand. There was a need, he said, for continuous assessment and development of programmes which would ensure that local demand is met.

“We have agreed with Government and recommended to Parliament on the need for minimum local content procurement rules for Government, private sector, wholesalers and retail operators in the country,” said Mr Moyo.

“We start by allowing limited imports and giving a time period to completely replace imports. It must be understood that not all products can be produced locally in an issue of magnitude and progressing towards producing within the country for the majority of the things we consume.”

An example in this instance, said Mr Moyo, was that 70 percent of all products sold on retail shelves in Zimbabwe must be made in Zimbabwe and 70 percent of all Government purchases must be Zimbabwean made goods.

Meanwhile, the Buy Zimbabwe Campaign says it is targeting consumers in its quest to promote consumption of locally produced goods. The thrust of the campaign is to unlock the country’s economic potential through aggressive support of the production and consumption of local goods and services.

Buy Zimbabwe economist Mr Kipson Gundani said consumers were key in the success of the buy local policy, hence the campaign was “going to the street”.

“We have been very effective in policy reform but now we are going to the people to incentivise the consumer to like our own (locally produced) and to teach them the benefits that accrue to them by buying local,” said Mr Gundani.

He said there was a huge gap in terms of knowledge and sometimes people unknowingly consumed local products. A law meant to regulate buying local, the Buy Zimbabwe Act, he added, had been crafted and was enshrined in the Local Content policy.

@BiancaMlilo

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