Speculators threatening economy, says Chiwenga
THE gains being recorded in the economy are being threatened by speculators and continued indiscipline on the parallel market, Vice-President, Dr Constantino Chiwenga, said yesterday.
Despite the sustained fiscal discipline and tight monetary conditions underpinned by the strong policy framework as well as close coordination by fiscal and monetary authorities, pricing of basic goods and services remains way above the purchasing power of ordinary citizens.
The Government has expressed concern over this trend at a time when the Reserve Bank of Zimbabwe (RBZ) has successfully operationalised the official Foreign Currency Auction System, which has set the country firmly on a path to price and exchange rate stability.
About US$1,72 billion has so far been disbursed towards ensuring uninterrupted financing of the importation of key raw materials and equipment for the productive sectors of the economy, according to the apex bank.
This week the local dollar is trading at 1:86,9 to the US-dollar on the official platform and yet businesses that benefit from the auction system continue to index their prices on the speculative parallel market rate, which has risen to between 1:130 and 1:150 or above in worst scenarios. This has resulted in widespread outcry by consumers whose income is being eroded.
“The drawback, which we continue to face, is indiscipline on the parallel market, which continues to stir up negative expectations that undermine the impressive efforts by the monetary authorities,” said Dr Chiwenga in his keynote address at the Zimbabwe International Business Conference in Bulawayo.
“I wish to warn the perpetrators of this heinous crime that the long arm of the law will soon catch up with them.”
The Vice-President, however, assured the gathering, which comprised Cabinet ministers, industry executives as well as local and foreign exhibitors, that the Government would continue to implement measures that take the economy forward in line with the National Development Strategy (NDS1:2021-2025), which should deliver an upper middle-income economy by 2030.
This transformation trajectory will be achieved through increasing support for the productive sector, which has already seen manufacturing sector capacity rising from 36 percent in 2019 to 47 percent last year and 54 percent in the second quarter of this year.
Industry leaders have estimated a further jump in capacity utilisation to above 60 percent by the end of the year.
NDS1 rollout is riding smoothly on the milestones achieved the Transitional Stabilisation Programme (TSP:2018-2019), which sought to reverse the historic distress of high inflation, low-capacity utilisation and productivity, as well as loss of jobs in the wage employment sector.
“We no longer view our economy as comprising a formal and informal sector. Instead, we consider our economy as comprising economic agents, including the micro, small and medium enterprises variously referred by some as the informal sector,” said VP Chiwenga.
“This paradigm shift means that enterprising individuals sustaining themselves, through engagement in business in the micro-small and medium enterprises sector, should no longer be considered as unemployed just because they are not in wage employment.
“Our thrust in the Second Republic is to encourage and incentivise more people to start business and improve their personal lives, through lawful means.”
The VP applauded efforts shown by industry leaders in boosting productivity and urged them to improve on what has already been achieved so far through embracing research and technology to spur innovation in the production of goods and services, while fostering development of value chains.
Despite the disruptive Covid-19 pandemic, Dr Chiwenga said Zimbabwe was poised for an economic boom, estimated at 7,8 percent by the end of the year, according to the Treasury.
The bumper harvest received in the last season is among the key boosters while the firming of international commodity prices, particularly from minerals such as platinum, nickel and copper, is expected to set the stage for the attainment of a US$12 billion mining economy by 2023, said the Vice-President.
“Because of this strong external sector performance, the foreign currency supply has been buoyant, rising by 9,1 percent to US$4,02 billion in the first half of the year, compared to US$3,12 billion received in the comparable prior year,” he said.
Dr Chiwenga urged local businesses to embrace regional integration and the recently operationalised African Continental Free Trade Area (AfCFTA) to widen their export markets in the quest for increased intra-Africa trade.
To thrust the on-going economic recovery to greater heights, he briefed delegates about the massive rollout of several key infrastructure projects such as roads, airports, irrigation, housing, energy, sewer and water reticulation as well as dams.
“These programmes and projects are meant to restore basic infrastructure without, which our desire for rapid but balanced economic growth and development cannot be realised. Infrastructure is the lifeblood of the economy,” said VP Chiwenga. Herald