GOVERNMENT will explore all available avenues to secure affordable lines of credit to revive the manufacturing sector, Vice President Joice Mujuru said yesterday.
Addressing delegates who attended the ZimTrade Exporters’ Conference in Harare, VP Mujuru said Government was concerned with liquidity constraints affecting manufacturers, saying the economic policy to be launched soon would address some of the challenges. Zimbabwe’s manufacturing sector requires an estimated US$2 billion for recapitalisation.
“I would like to assure industry and commerce that Government is aware of the liquidity and supply side challenges that industry is facing,” said VP Mujuru.
“Consequently, Government, will, through the Zimbabwe Agenda for Sustainable Socio-Economic Transformation, explore all means to access affordable sources of funding to capacitate industry, to retool and to invest in new and relevant technology.”
Zim Asset is a medium-term economic blueprint that focuses on stimulating the economy. The blueprint targets an average 7,3 percent economic growth in the next five years. VP Mujuru said the poor performance of the manufacturing sector had seen the influx of mostly sub-standard imports, thus creating unfair competition for local producers.
Some of the factors that have constrained the industry include low aggregate demand due to low disposable incomes.
This has resulted in the manufacturing sector operating below capacity. Individual consumption is skewed towards basic commodities, thereby negatively affecting the rest of the industry outside the value chain of basic commodities.
Lack of demand has also been worsened by the fact that Government has little to spend. In a country with a Government with a limited purse, the economy goes into stagnation in the absence of a stimulus package.
Lack of long-term loans caused by transitory deposits has also made it difficult for industry to obtain long- term credit for retooling and working capital.
With Zimbabwe’s debt at close to US$11 billion, this on its own raises the country’s risk profile and makes it difficult for companies to source offshore finance.
In recent years, Zimbabwe’s economy has also suffered from stiff competition from foreign trade leading to a situation where the country is literally running trade deficits with most trading partners.
VP Mujuru expressed concern over the widening the trade deficit, saying urgent measures must be taken to improve the trade balance through robust export performance.
“As an economy, it is critical to restore the manufacturing sector’s contribution to export earnings from the current 16 percent to 50 percent by 2016,” said VP Mujuru. She urged companies to redefine their business models and be innovative to sustain competition.
Local producers were also urged to take advantage of bilateral regional and international trade and investment protocols signed by the Government to penetrate export markets.
VP Mujuru implored ZimTrade to embrace Information Communication Technology by promoting on-line trading, critical for facilitating imports from Zimbabwe.
Earlier, ZimTrade chief executive Mrs Sithembile Pi- lime told delegates that the trade and export promotion body would next year embark on road shows to promote Zimbabwe’s exports.
She said there was need to spread the market risk as Zimbabwe was exporting the bulk of its goods to South Africa. “If anything goes wrong with that market, we will be in trouble,” she said.
The conference was held under the theme “Value Chain Business Models: The Key to Export Competitiveness”.