Ndamu Sandu
10 February 2008
ZIMBABWE'S battered industries need a staggering US$2 billion to recapitalise after last year's price blitz, a business leader said last week.
Callisto Jokonya, Confederation of Zimbabwe Industries (CZI) president told Standardbusiness the massive injection, coupled with supportive policies, would provide a lasting solution to the crisis confronting industries.
"We need friendly policies and once they are in place the world will open up," he said, adding the world supports friendly policies.
Jokonya said businesses could negotiate economic integration "with our friends in the world" once the environment was conducive for business operations.
Businesses have been choked by price controls, weakening their viability. Prices have to be approved by the National Incomes and Pricing Commission (NIPC). The commission has been taking its time to approve price increases due to a shortage of staff.
Last year, the government ordered all businesses to slash prices of goods and services by half, in what was seen as a populist move that left shop shelves empty.
The Reserve Bank of Zimbabwe then came up with a loan facility in which businesses would access cheap funds for restocking. Under the Basic Commodities Supply Side Intervention (BACOSSI), businesses accessed loans at a concessionary rate of 25 percent per annum.
Jokonya said BACOSSI was a short-term measure and the huge capital injection would be a lasting solution to industries' woes.
He said business needed supportive policies such as the removal of price controls and the availability of foreign currency for raw material imports.
In his January 2008 monetary policy announcement, RBZ governor Gideon Gono said BACOSSI must not be seen as a permanent feature of monetary policy interventions.
"Instead, this facility was meant to act as an emergency shock-absorber to foreclose the possible collapse of companies which could not be able to restock their production systems or retail outlets," Gono said.
He said BACOSSI would run through to 30 June. As at 8 January US$13.5 million and Z$18.6 trillion had been disbursed to companies under the facility.
Gono said as a result of BACOSSI, major suppliers of basic commodities have seen capacity utilization improving from as low as 10 percent to 65 percent.
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