Reserve Bank of Zimbabwe Governor Dr John Mangudya has called for an immediate further reduction in prices of locally-produced goods if the country is to stem the influx of cheap imports and the liquidity crisis haunting the economy.
Although the last few months have seen prices of such products as bread, mobile phone tariffs and cooking oil going down, much more needs to be done to help stabilise the economy.
Dr Mangudya was addressing a workshop for parliamentarians and employers to look at short-term mechanisms of improving the state of the economy.
“We lack competitiveness of our products because of the high cost of doing business because we are using the US dollar.
“The US dollar has been appreciating against all major currencies and because of that, products of our neighbours are cheaper.
“In other countries they can depreciate their currencies to maintain their competitiveness, but in Zimbabwe we cannot because we have a fixed exchange rate because we are using the US dollar.
“What we need to do therefore is to depreciate the currency internally through price reductions because our prices are very high.”
The central bank chief said it was imperative that businesspeople discarded the mentality they had during the hyperinflation era of making super profits.
“We have people with the Zimbabwe dollar mentality of making 100 percent profit. We need to change that.
“My appeal is let us respect the US dollar,” Dr Mangudya said.
He also lamented the cost of borrowing, urging financial institutions to lower their interests rates.
“We need to adjust downwards the cost of finance. Banks interest rates are up to 30 percent, making it difficult to borrow,” he said.
The RBZ governor said the high cost of borrowing contributed to the high cost of products, making Zimbabwe’s commodities uncompetitive, hence the high imports.
This, he said, led to company closures as most local products failed to compete on the market.
Industry and Commerce Minister Mike Bimha said his ministry had appointed a private sector-led committee to investigate ways of improving business conditions in the country.
“We have set up an ad hoc committee made up of people drawn from the private sector to look at the cost of doing business in the country,” said Minister Bimha.
He added that the findings would be used to make comparisons with neighbouring countries to inform adjustments to be made where necessary.
He also said the National Incomes and Pricing Commission would soon be transformed into the National Competitiveness Commission to continuously look at ways of improving the business environment in the country.