Enacy Mapakame Business Reporter
ZIMBABWE should address high wage levels, which are in some cases 10 times more than those prevailing in the region, as this is contributing to the erosion of competitiveness for local products, the Minister of Policy Coordination and Promotion of Socio-Economic Ventures in the President’s Office Simon Khaya Moyo has said. Since wages are factored in the cost of production, the higher the wages the greater the cost, and this makes prices of goods and services higher.
In a speech read on his behalf by Industry and Commerce Deputy Minister Chiratidzo Mabuwa at a competitiveness conference last week, Ambassador Moyo indicated that investors, who use minimum wage as an indicator, could look elsewhere.
A regional comparison puts Zimbabwe at a disadvantaged position as its wages are significantly higher. “One erudite economist made a comparative analysis of the regional wages. He indicated that Zimbabwe offers minimum wages of $275 to $300, Malawi offers $30, Mozambique $120, Botswana $93 and Zambia $100.
“It is obvious that using this criterion of minimum wages, investors will not invest in Zimbabwe,” he said. Competitiveness is a key driver for growth and development. Zimbabwe is poorly ranked on competitiveness by global organisations.
According to the global competitiveness report, Zimbabwe is ranked number 125 out of 144 economies. Additionally, the World Bank’s 2016 Ease of Doing Business ranks Zimbabwe 155 out of 189 economies. Investors world over, take cognisance of such rankings before making any investment into a country, thus affecting foreign direct investment flows.
“Competitiveness can be enhanced through the attraction of FDI into the economy. Countries which have managed to compete on the global market have done so predominantly on the back of attracting huge FDI inflow.
“However, attraction of huge FDI inflows presupposes that our country has investor friendly policies,” said Ambassador Moyo. Countries like China, Brazil, Malaysia, Singapore, India, Rwanda and Uganda have managed to be competitive on the global market predominantly on the back of attracting huge FDI inflows.
According to the 2016 Zimbabwe National Competitiveness Report, local industry competitiveness is affected by three key factors, that is costs and fees relating to Government, utility charges and private sector inefficiencies and structural rigidities.