'Zimbabwe needs more entrepreneurs,' says Chinamasa

The Zimbabwean economy is in desperate need of entrepreneurs who take the lead in securing foreign investment that will help their companies recover from the effects of the liquidity challenges faced by industry, an official has said.

Speaking at the Zimbabwe Economic Outlook symposium held by the Confederation of Zimbabwe Industries Finance and Economic Development Minister Patrick Chinamasa said the country needs more entrepreneurs than managers of foreign owned companies.

"As Minister of Finance, I would rather have a conversation with a small master than a manager of a big cooperation because we can make decisions which we can implement. We cannot run a country when we have to take months to make decisions which affect our destiny. You don't expect foreign firms to come and play the role that should be played by local firms," he added.

He said most would be investors that have visited the country have intimated that they wish to invest in already existing, well managed businesses but they were failing to find any entrepreneurs to fit their requirements.

"(Fund managers) normally want to invest through the stock exchange. And that their observation about our stock exchange was that there were too few counters to invest in, that the stock exchange was concentrated in just a few firms. They also observed that they don't see any new offerings and that lack of new offerings means that there are no new ideas in the economy being generated requiring to be financed- no new ideas being generated by people in that economy who are now appealing to investors for support," he said.

Minister Chinamasa said Zimbabweans also need to curb their spending habits and focus more on savings and profit retention for their businesses to gain competitiveness.

He said there is need for companies to adapt to the dynamic business environment in order to build sustainable businesses.

"I have noticed an insatiable appetite for consumption and expensive lifestyles at the expense of savings or profit retentions. Evidently, the savings culture at individual, household, firm, industry and country levels has disappeared and this remains our Achilles heel," he said.

Speaking at the same event, Economist Professor Tony Hawkins said economic growth in 2015, if there is any at all will be minimal although the agricultural season and commodity prices could potentially impact the actual outcome.

He said the way forward in dealing with the country's competitiveness is to deal with the over-valuation of the US dollar.
 
"Sleepwalking into dollarization - as Zimbabwe did - is far easier than exiting it. If, as seems likely, the dollar continues to strengthen, Zimbabwe's competitiveness deficit will deepen. After enjoying the benefits of dollarization we are now up against the flipside - not just currency overvaluation, but also deflation," he said.

He said only three out of 34 countries with widely-traded currencies have strengthened against the dollar in the past year and the implications for Zimbabwe are obvious.

Prof Hawkins added that a competitive exchange rate is essential for rapid output and employment growth and re-industrialization.

He said unless the dollar declines steeply in the interim, policymakers will have to decide how and when to de-dollarize.

"There are no quick fixes for an overvalued exchange rate. The best way ahead is a combination of far-reaching structural reforms to boost competitiveness while simultaneously moving - very gradually - towards a more competitive exchange rate regime," he said.