Industrialists lobby for lower production costs

As Zimbabwe seeks to capitalise on trade opportunities under the African Continental Free Trade Area (AfCFTA), industrialists are advocating the reduction of production costs to enhance the competitiveness of domestic products.
President Mnangagwa has expressed his Government’s readiness to address private sector concerns and is actively working on initiatives to promote low-cost production.

This call comes at a time when the Government is refining its monetary policy to increase the use of the local currency, a key factor in boosting competitiveness.

The issue of easing the cost burden on businesses was a major topic of discussion last week during the National Competitiveness Commission (NCC) inaugural Competitiveness Summit, which was officially opened by President Mnangagwa.

Mr Busisa Moyo

Reflecting on the matter, prominent industrialist and CEO of United Refineries Limited Group, Mr Busisa Moyo, emphasised the importance of creating a low-cost environment and highlighted the need to embrace the local ZWG currency to reduce the foreign currency-based cost of doing business.

“A low-cost environment that prioritises the ease of doing business is critical for the growth of a manufacturing sector to avoid offshoring of production to cheaper jurisdictions,” Mr Moyo posted on his X-handle.

“This is one of the reasons why a local currency is important. The USD destroyed all competitiveness in the last two and half decades and that’s why we constantly need tariffs, permits, and other non-tariff barriers (NTBs).”
According to Mr Moyo, the use of strong currencies, as is the case in Zimbabwe where the United States dollar is dominant, encourages imports, and discourages exports by nature, thereby, engendering a high-cost environment.

Economist, Mr George Nhepera, concurred saying promoting low-cost production is one of the best strategies to improve competitiveness and economic growth in a global economy.

“This is the strategy currently being followed by China, Japan, and South Korea leading to rapid industrialisation, increased exports, and a high standard of living for its citizens,” he said.

“While it is critical to achieving low-cost production using our currency, which is relatively weaker compared to other international currencies, it should be noted that the best route should be promoting a low-cost production environment through embracing cutting-edge technology in our production and manufacturing systems,” said Mr Nhepera.
“This is the model currently being pursued by the majority of European nations including our neighbors such as South Africa and Botswana.

“It’s noble to reduce costs through technology rather than through payment of lower wages and salaries using a weaker currency. It affects the morale and dignity of our workforce.”
Bulawayo businessman, Mr Morris Mpala, said the need for low-cost production holds the key to the future of effective competitiveness of local industries.

He said the cost of production in Zimbabwe has to be interrogated and solutions proffered to create an enabling environment for such.

“One critical factor is the local currency use, which should be encouraged but should be encouraged when all fundamentals are right for its sole use,” said Mr Mpala.

“If we are still in the multi-currency era, we need to let the currency float freely to represent a fair value and that’s a start.”
Some of the issues that affect competitiveness as mentioned by industrialists include the high cost of power, local authority rates, and high cost of compliance, amongst other things. —-chrncile