Lloyd Gumbo Senior Reporter
Industry should take advantage of the South African rand’s decline to import raw materials and capital goods to revive the economy, Reserve Bank Governor, Dr John Mangudya has said.
The official exchange rate of the US dollar to the South African rand was at $1 to R16,6 yesterday.
In a wide-ranging interview with The Herald this week, Dr Mangudya said Zimbabwe stood to benefit if business imported capital goods and raw materials instead of finished goods or consumables.
“We should also look at the depression of the rand as a benefit to us,” he said. “Because if you have transformed your mindset, it means you are going to be able to import capital goods from South Africa at a cheaper price and invest in Zimbabwe and also produce at a lower cost.
“This might be the time for Zimbabweans to import capital goods or raw materials from South Africa at a cheaper price and then they utilise them here to turnaround the economy.”
He said Zimbabwe was not operating in a vacuum and trades with other countries.
“We need to do an analysis. Do we import more raw materials and finished products or do we import raw materials and capital goods?
“If it is capital goods and raw materials, then it means the depression of currency is to our benefit and therefore it means we need to utilise it to our benefit.
“But if it is more of products such as madhorofiya (gooseberries) from South Africa, those are things we can grow here. Again it is a mindset that we need to transform both the mindset, economic and social transformation.
“Transformation is change, fundamental change of the economy and we are there to help that process and we have said to ourselves we need to see it through,” said Dr Mangudya.
He said it was important for Zimbabwe to increase its production levels to grow the economy instead of relying on imports.
“The missing link in Zimbabwe is production. We need to produce goods and services so that our shops are full of Zimbabwean products. The Buy Zimbabwe campaign starts with production.
“Once we produce goods as opposed to import them, people will buy. We also need to produce the goods at a right and competitive price. We talk about production, if your production is high it means that there will be lower costs of production. You are going to spread your costs over a bigger size of production and because of economies of scale you are going to have a lower cost of production,” he said.
Dr Mangudya said the financial services sector had a major role to play in economic revival as long as they reduce their interest rates.