Biti urged to announce measures to boost industry

Biti announces the budget review to Parliament on July 15 at a time inflation is showing worrying signs of resurgence, while local industry has continued to struggle largely because of a liquidity crunch that has deprived factories of cash for re-tooling and to import raw materials.

Tony Nyangarara, an economic analyst with a local bank, said industry and commerce was beginning to lose confidence in the inclusive governments ability to revive the economy that was in recession for the past 10 years and only recorded growth last year after the coalition administration came into office.

Nyangarara called for a budget review statement that contains measures to keep resurgent inflation in check and to address the liquidity crunch that has seen local banks unable to provide loans to industries to pay for vital imports.

With foreign financiers reluctant to loan to Zimbabwe, local factories have been left in a lurch, short of cash to boost production, while manufacturing companies from neighbouring countries continue to entrench their positions in the local market with shop shelves filled up with goods from foreign suppliers especially from South Africa.

Indications so far are that our local industry continues to struggle as shown by the continued flooding of imports vis–vis our own products, Nyangarara said.

The Chamber of Mines Chris Hokonya said the government should shelve the controversial black economic empowerment scheme because conflicting messages and uncertainty over the direction of the scheme were discouraging potential foreign investors.

Hokonya said despite the government announcing that it had reviewed the indigenisation regulations to lift the blanket requirement on foreign firms to cede 51 percent stake to local blacks, there remained uncertainty over the law and investors were not sure about the long-term security of their investments in Zimbabwe.

Indigenisation Minister Saviour Kasukuwere last week said the government will set varying percentages of shareholding foreign-owned companies in various sectors of the economy must transfer to local blacks, a major shift from the earlier requirement that all foreignowned firms cede controlling stake to locals.

Hokonya said: The budget review should clearly state the government position on key policy issues if the country is to attract any meaningful inflows of capital.

He said while significant progress had been made since the last budget announcement in December, there was little investment in infrastructure development, adding that recurrent power outages were an example of how ensuring modern infrastructure was crucial to any plan to revive the economy.

Biti in December presented a US$2,250 billion national budget statement which included a US$810 million vote of credit. But a paltry US$3 million had by last March been realised from the vote of credit as international financiers and donors remain reluctant to provide funds to the unity government citing the slow pace of economic and democratic reforms.