Zimbabwe needs aggressive international re-engagement strategy to unlock fresh funding: CZI
HARARE – Zimbabwe needs an aggressive international re-engagement strategy to unlock financial support from International Financial Institutions and national and corporate levels, the Confederation of Zimbabwe Industries (CZI) said.
The southern African nation has been actively on re-engagement drive in an effort to end the country’s isolation and woo foreign investment.
Corruption and poorly implemented economic reforms since 2018 have triggered another cycle of hyperinflation, eroding the capacity of the already fragile public health, education and social protection systems on which the majority of the population depends, according to Maverick Citizen’s report Cartel Power Dynamics in Zimbabwe.
Zimbabwe ranks number 157th on Transparency International world corruption index.
Transparency International Zimbabwe notes that the cost of corruption involving state officials, including the police, local government, education officials and transport sector regulators, is in excess of US$1 billion every year.
“To go with is to deal with corruption to minimise the impact of looting on the economy,” stated CZI in its latest report.
CZI said policy consistency is needed to sustain the operations of the auction. It also cited the need for fiscal consolidation and monetary discipline.
“Trade liberalisation especially removal of too many licenses to improve the business environment and encourage exports to make the auction liquid. Companies have often complained about slow turnaround especially with trade documentation.”
It also talks for the need of a robust Import Substitution Strategy and restructuring of the State Owned Enterprises.
The Zimbabwean economy has been in turmoil marred by policy inconsistency and a taxing business environment, according to CZI.
“Fixing the exchange rate did not solve our problems but rather compounded them. The Zimbabwean economy is experiencing the same characteristics as those countries that also opted for the auction system in a bid to solve their crisis,” CZI said.
The economy is characterised by high inflation, high parallel foreign exchange market premium, lack of foreign exchange reserves and misallocation of foreign exchange.
According to the CZI 2019 manufacturing survey, firms were only accessing 10 percent of their total foreign currency requirements.