Monetary stability raises hopes for 2022


Sunday mail

Business journalist

INDUSTRY’s representative body, Zimbabwe Confederation of Industries (CZI), said the government should not allow economic gains made in 2021 to be reversed and urged authorities to further maintain currency stability. .

The operating environment improved considerably over the past year thanks to the slowdown in inflation, stable exchange rates and a

Covid-19 management program.

CZI Chief Executive Officer Sekai Kuvarika told Sunday Mail Business that the industry now knows what a stable environment can produce, as well as indicators of that stability.

“When we start to lose these indicators, we have to act quickly before the problems change,” she said.

“In the first half of 2021, foreign exchange was available in the formal (auction) market, the parallel market premium was low, energy was available, and of course we saw growth in manufacturing and in other sectors.

“However, the biggest challenge and risk for the economy remains the currency issue. The exchange rate and the parallel market premium have created distortions and arbitrage opportunities that penalize exporters and those engaged in productive activities. formal.

The industry, Kuvarika added, spent most of the second half of 2021 lobbying the government to fine-tune the foreign exchange auction system, but progress has been a bit slow.

“The challenge with this is that procrastinating policy correction allows problems to mutate and become more complex and difficult to solve.

“Let us also agree on the urgency with which we must solve the currency problem.”

Deputy Minister of Industry and Trade Raj Modi told our Bulawayo office last week that efforts to revive Bulawayo industries had gained momentum in 2021 thanks to continued stability.

Unlike in recent years, when the second largest city has suffered massive closures and the relocation of large companies, the tide is turning as more companies now increase their capacities and exports.

The Second Republic, under the leadership of President Mnangagwa, works closely with the private sector to implement comprehensive reforms.

Already Bulawayo companies such as Treger Group of Companies, Archer Clothing, United Refineries Limited, Sheppco BMA Fasteners, Metal Founders, Datlabs, Kango Products, Zambezi Tanners, General Beltings and Arenel are emerging stronger despite headwinds caused by the coronavirus .

Deputy Minister Modi insists that a positive outlook is emerging for the city’s businesses this year.

“Definitely, we are very positive about the gains made so far. 2021 has ended on a positive note and we are moving forward to do more, ”he said.

“You can also see that companies like National Blankets, which went out of business a few years ago, are now back on their feet and we’re helping them retool.

“We expect national coverage to come out stronger and the government is ready to back it up.
“We are looking at these industries in terms of sectoral value chains and we expect a lot of factories to reopen. We are working to revive more and great things are going to happen in Bulawayo. “

According to the Minister of Finance and Economic Development, Professor Mthuli Ncube, growth in the manufacturing sector is expected to remain positive at 5.5% in 2022 and will be supported by tax incentives aimed at boosting growth.

During the presentation of the 2022 budget, Minister Ncube said the government will facilitate the transition to the production of high value-added manufactured products that further contribute to production, export earnings and create decent jobs.

“Growth is supported by relatively high consumer demand, mainly due to increased income from agricultural activities, infrastructure spending, increased mining activity and the general reopening of the economy.” , did he declare.

In order to support the growth momentum, the Ministry of Industry and Commerce received $ 3.9 billion, which will be channeled to strengthen the industry.

In 2021, growth in the manufacturing sector has been revised downward to 6.2% from the initial projection of 7% due to the Covid-19 foreclosure measures, delays in accessing foreign currencies and the intermittent electricity.

However, in the 2022 budget, there were revenue-generating measures to maintain fiscal stability by stimulating the growth of productive sectors, improving revenue collection, providing relief and simplifying tax administration to improve income. business environment.

Since 2009, the government has granted tax breaks and deferred value added tax (VAT) to the manufacturing, mining, tourism, agriculture, transport, energy and health sectors in order to reduce production costs.

The 2022 budget also provides for the duty-free importation of capital goods.

“Considering the wide use of these capital goods by the productive sectors and the need to reduce the cost of doing business, I propose to provide duty free importation of capital goods through the tariff regime. “said Minister Ncube, adding the measures. will take effect on July 1, 2022.

In the meantime, the government will strengthen the provisions governing the installation to minimize loopholes in the administration.

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