“We cannot continue to import things that we can produce locally. This has caused the country’s current account deficit,” Zhanda said in a recent interview.
According to the International Monetary Fund figures, Zimbabwe’s current account deficit widened to 36 percent of the Gross Domestic Product in 2011, from 29 percent in 2010.
Early this year Finance Minister Tendai Biti projected that the deficit would remain firm, leaving an anticipated deficit of 28.5 percent by year end as the country continues to import more than it exports.
The state of Zimbabwe’s manufacturing industry, although quite improved, is still reeling from the effects of the decade-long political and economic meltdown experienced from the late 1990s to 2009.
Turning to the inability of the manufacturing sector to recapitalise and renew equipment for maximum utilization, Zhanda said, “We need to readdress the issue of modernisation.”
According to the Confederation of Zimbabwe Industries, the local industry is currently operating at about 44 percent of its capacity due to, among many factors, recapitalisation problems and lack of resources to renew equipment.
“In order to add value to goods we manufacture, we need to incentivise our exports like they do in other countries like South Africa” said Zhanda.
Export incentives are monetary, tax or legal incentives designed to encourage businesses to export certain types of goods or services. This is to keep domestic products competitive in the global market.
On the country’s use of the foreign currency, Zhanda said reintroducing the Zimbabwean dollar would return the country to the same inflationary pressures faced in the mid-2000s.
Post published in: News
Zhanda has a point. Come after the elections, whoever is going to phone the new government has a lot to do to revive the economy, most important will be to bring certainty in the economy that will give investor confidence.