Govt swallows pride on economy

The biting liquidity crunch, falling aggregate demand, continued company closures and falling capacity utilisation seem to be forcing government to swallow its pride.

Finance Minister Patrick Chinamasa.
Finance Minister Patrick Chinamasa.

The message now coming from those in power is flexibility on some legislation and policies previously said to be untouchable.

Desperate for investment, the authorities seem to have finally realised that domestic-led economic recovery is practically impossible because of lack of liquidity. Finance Minister Patrick Chinamasa has recently pointed out that the indigenisation law is not a “one-size-fits-all.” He said this in response to the increasing of capital by a Malaysian investor into AfrAsia Bank, which saw the investor now owning more than 60 percent of the bank, against the legislated 49 percent for foreigners.

President Robert Mugabe also expressed similar sentiments in his Independence day speech. “If a company is getting raw materials from outside and the raw materials are not Zimbabwean… you can negotiate with the company… we cannot demand 51 percent where we don’t have raw materials,” he said.

Over the years, the business community has been calling for the alignment of indigenisation regulations with the need to attract foreign investment. But this message fell on deaf ears.

The hard stance on corruption being taken by the ruling party, apart from the faction-factor, is also an indication of a desperate regime trying to give an impression that the country is a safe investment haven. Mugabe is on record saying, “I want to assure you that where we find corruption … where cases have been proven beyond doubt, then they (offenders) will be punished.”

Government is now mulling the implementation of labour market flexibility, a proposal that has for long been tabled by business. The trades unions have threatened to take to the streets if flexibility is introduced, but many analysts believe a pragmatic compromise will be found, as this is vital to assist in revitalising the moribund economy.

Post published in: Business

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