THE Confederation of Zimbabwe Industries (CZI) has bemoaned the country’s huge debt impact on overall industrial productivity amid calls for authorities to implement measures that will result in reduction of the debt crisis.
Speaking to delegates at the ongoing three days long Zimbabwe Annual Multi- Stakeholder Debt Conference in Harare, CZI chief economist Cornelius Dube said evidence shows a strong correlation between good debt management and productivity.
“Data indicates that between 1980 and 1998 when the government spent around 20 % of total revenue on debt servicing, the local industry performed very well in all spheres.
“On the reverse beyond 1998 and post the Government of National Unity era when the country endured a huge debt with reduced debt serving, the local manufacturing productivity drastically went down,” he said.
The remarks come against a background where the Southern Africa nation is saddled with a local debt of $20 billion and an external debt of over US$8 billion.
However, market watchers have since slammed unjust economic policies for unfairly reducing the local debt due to local currency devaluation.
“Debt can choke industry performance especially in a situation where the government cannot access funding from global financiers and in the process being left with only one choice of resorting to local sources.
“This in the process crowds out local companies and this still takes a toll on industrial productivity. It also becomes difficult to boost local demand,” he said.
Going forward , Dube urged the government to borrow for expansion reasons and enactment of mechanisms which creates related repayment capacity for the debts, create capacity to resolve current debt and seek national cohesion on new debt in future.
Speaking at the same event, top economist, Persistence Gwanyanya said fiscal responsibility as the only way towards debt resolution.
Bankers Association of Zimbabwe chief executive officer, Fanwell Mutongo said the country’s indebtedness has also affected local banks capacity to borrow beyond the borders.
“As a result we are unable to fund meaningful projects and much of our loans are in the short to medium term against the market demand which currently has an appetite for long term financing,” he said.