The GOVERNMENT and all its critical arms should maintain policy consistency to enhance market confidence and predictability critical for future planning, according to findings of the Zimbabwe National Chamber of Commerce (ZNCC) inaugural state of industry and commerce survey.
The survey results implored the governing and other responsible State authorities to conduct wide consultations with the business community before implementation of policies to avoid developing or adopting of detrimental policy initiatives.
Overall, the survey found that many businesses considered 2021 to be a better year than 2020 in terms of the state of individual operations, overall sectoral situation, growth in investment, and profitability, among others.
Notably, financial results of all listed companies released this year pointed to an overgrowth in volumes and profitability across all business segments, despite the fall out from Covid-19, which drove Zimbabwe into its first lockdown in March last year.
In demonstration of an improved operating environment, which was always going to need time to improve, Zimbabwe is expecting significant economic growth of 7,8 percent this year, while policy measures saw once rampant inflation plunging from record highs to a two year low in June.
“However, it is important to note that the proportion of those who perceived no change was slightly less than those who felt 2021 was better, save for the profitability aspect, where there was marked difference,” the survey says.
Nonetheless, the survey concluded that the score over a scale of zero to 100, demonstrated that the margin between those that feel the year had been much better than the prior period was marginal. Further, the survey also looked at issues regarding ease of doing business, where the number of entities that feel the environment was bad has decreased, the number of new business establishments, which increased, macro-economic indicators (where findings show growth and the fall in inflation) and sectoral capacity utilisation, where there has been huge improvement.
Done in partnership with Friedrich Naumann foundation, the survey also recommended that the Government should maintain its unwavering stance on the Covid-19 vaccination campaign towards achieving national herd immunity to reduce the need for frequent lockdowns, which are detrimental to the economy particularly given the emergency of the fourth wave of the Covid-19 pandemic (Omicron variant).
While presenting the findings of the ZNCC survey, University of Zimbabwe senior lecturer in the department of economics Dr. Carren Pindiriri indicated that a steadfast policy framework would go a long way in promoting confidence and better planning by firms. He, however, acknowledged the current constancy in terms of the introduction of policies in the economy.
“Coming from the findings is the need to have a stable and consistent policy framework that will not change time after time, maybe like the need to have fewer statutory instruments, this is to make sure that business people can plan knowing for sure that the policy is in place for a while without doubts.
“There is a need for stakeholder consultations and impact studies before statutory instruments are introduced to ensure both micro and macro-economic stability. So it will also help in making sure that the policies are consistent as they are right now probably, we need to maintain this state,” said Dr Pindiriri.
The survey also implored the Reserve Bank of Zimbabwe (RBZ) to continue crafting mechanisms aimed at refining the efficiency of the foreign exchange auction market system, further urging the Government to maintain fiscal discipline.
Furthermore, the study recommended monetary authorities to extend the tight monetary policy stance to M1 particularly local currency denominated transferable deposits in order to reduce resurgent inflationary pressures.
Dr Pindiriri called on the Government to up its efforts in clearing external debt arrears and re-engagement with international creditors and financiers with a view to opening up international lines of credit.
“The country is in dire need of patient but cheap capital for recapitalisation across all sectors,” said Dr Pindiriri.
On the ease of doing business front, the survey indicated the need for adequate financial resources to Zimbabwe Investment and Development Agency (ZIDA) to allow immediate digitisation and integration of their systems with other institutions such as the Registrar of Companies and ZIMRA for the enhancement of the one-stop shop agenda for investment.
The survey calls for the capacitation of the National Competitiveness Commission (NCC) to allow it to undertake in-depth research into various factors impeding the ease of doing business and competitiveness.
Source: Business Weekly