Mr Sifelani Jabangwe
Business Reporter
GOVERNMENT should speed up the implementation of measures aimed at addressing the high cost of doing business which has caused business to scale down production.
The measures were crafted in consultation with the private sector but the industry umbrella body, the Confederation of Zimbabwe Industries, is concerned at the lack of action to implement.
CZI vice president Mr Sifelani Jabangwe told Parliament’s Portfolio committee on Industry that the snail’s pace at which which the corrective measures were being implemented was cause for concern.
Despite having increased to a high of 57 percent from 30 percent around 2010, capacity utilisation has since been on a downward trend, a situation that is worrying CZI. The CZI says the slowdown in capacity utilisation has resulted in company closures, high unemployment and the continued high trade deficit.
Some of the challenges industry is faced with range from the cost of money, the myriad of licences businesses require before commencing operations and high cost of labour. Business is also concerned that the targeted timeframe for the implementation of the proposed amendments to the labour laws will be missed.
Industry says labour is one of the most critical costs contributing to the cost of doing business. They say labour laws do not allow for companies to reduce the size of the labour force in line with the demand for products prevailing in the market as the law is rigid.
The cost of retrenching is also very high and it affects companies’ competitiveness.
Producers are also facing stiff competition from cheap imports being smuggled into the country.
“We have more imported products coming into Zimbabwe resulting in stiff competition for our members. When the economy was considered to be performing well imports were at about $4 billion but now at a time when the economy is said to be facing challenges, imports have risen to $7 billion.”
“We have seen an increase in closures of companies. Local manufacturers are being pushed out of the market,” said Mr Jabangwe.
There are issues of inadequate border controls as smuggling continues to be on the rise.
“Some of the products being smuggled into the country are of cheaper quality products than locally manufacture goods,” said Mr Jabangwe.