The ManicaPost
Business Correspondent
Despite tremendous efforts by Government on the ease of doing business reforms since 2015 (still ongoing) which were aimed at enhancing the country’s level of competitiveness, Zimbabwe has taken a slip on the World Economic Forum’s Global Competitiveness Index (GCI) 2016-2017 raising concerns about the slow pace stakeholders are taking in addressing the competitiveness agenda.
The country remains amongst the world’s highly uncompetitive destinations with the GCI 2016-2017 ranking Zimbabwe 126 out of 138 countries, from 125 in 2015/16 and 124 in 2014/15 reports.
The 2016 Zimbabwe National Competitiveness Report which was launched at the Harare International Conference Centre last week is testimony of the country’s poor rating on the global stage as it came out with largely the same bottlenecks impacting on business as those identified in its previous edition.
Among a wide range of factors impacting negatively on the country’s competitiveness were corruption, policy instability and inconsistency, access to finance, Government bureaucracy and infrastructure inadequateness.
This year’s edition of the ZNCR 2016 mainly centred on the manufacturing and financial services sectors which are tipped to steer the economy forward. The report showed that the country had a poor credit rating attributed to the accumulation of arrears amounting to US$ 1,7 billion to international financiers making it difficult to access venture capital.
It also highlighted that the low national savings could not support investment activity in the financial services sector as there was still lack of trust in the banking system. On the manufacturing sector, the country remains a highly expensive ground for manufacturing operation.
The cost of utilities, access to finance, cost of transport, cost of labour and taxation emerged amongst the highest in the Sub Saharan With the country seeking to prop its export earnings to sustain its ailing multi-currency system, the cost of exporting almost doubles the regional average.
The report suggested that its costs US$ 4 265,00 to export a container from Zimbabwe while it costs an average US$ 2 200,70 to export from any were in the Sub Saharan region. Also significant in the 2016 National Competitiveness Report was the high cost of labour in the country which did not synchronise with the levels of production.
This reflected lack of congruity between productivity and salaries hence it had a negative bearing on the investment suitability of the market. Government has been accused of mainly tackling institutional challenges such as bringing efficiency in registration of companies and the setting up of the National Competitiveness Commission in the ease of doing business reforms without having focus on reducing direct costs of doing business which are more crucial the viability of any business investment.
Officially opening the Inaugural National Economic Symposium Vice President Emmerson Mnangagwa spelt the need for negotiations between private and public sectors in coming up with solutions that reduce the high costs of business.
“It’s not only dialogue that we will be able to deliver.
“There is need for dialogue between the private sector and public sectors,” he said.
However Government will soon launch the National Competitiveness Commission which will take care of competitiveness issues such as assisting in the identification of cross cutting issues affecting the country’s competitiveness and develop the appropriate strategies for improvement.
The National Productivity Institute (NPI) will be put in place in the first quarter of 2017 to spearhead research related to productivity in a bid to rationalise the labour market. It is going to create a framework that will link the country’s wage levels to productivity.
“This is why we say there is need for dialogue.
“We can come together government, business, labour and even utility providers and come up with a suitable model that answers problems which continues to hold us ransom on our competitiveness,” Mr Godwin Murehwa, National Economic Consultative Forum (NECF) senior economist told Post Business.
“This is why it has become difficult to reach consensus on issues relating to labour for instance because they have to understand what it means to continue with the same high labour costs and government also need to understand concerns from labor,” he added.
Zimbabwe is the only country currently recording a negative percentage in labour productivity annual growth (-0,82) which suggests that the country is earning more than it was producing.
The issue of minimum wage have been contentious with employers arguing that the wages are too high for the kind of economy they are operating in whilst trade unions have highlighted the contrary.
In his mid-term monetary policy statement Reserve Bank Governor Dr John Mangudya outlined that the country remains an expensive investment markets and it needs to devalue by up to 45 percent over a three year period to restore competitiveness emphasising that this would require wider consultations with various stakeholders.
