No pay rises this year, says RBZ chief

ZIMBABWEANS should not expect salary increases this year because the economy cannot sustain them, Reserve Bank Governor Dr John Mangudya has said.

Addressing editors from media houses across the country at his offices on Wednesday, Dr Mangudya said there was no scope in increasing salaries when there was not much productivity taking place.

"We need to balance the economy first and increase salaries later. It will be a mistake to increase salaries now because the economy cannot sustain any salary increments. People are just being paid for going to work or for activity and not productivity.

"Most companies are in a Catch-22 situation because it is more expensive to fire or retrench a person than to keep him working.

"Our work ethics have gone bad. We need a paradigm shift on our attitude towards work. There is gross indiscipline and we need to change that.

"Zimbabwe has a high literacy rate, but this is not helping us as a country. We should use our education effectively."

The central bank chief's comments come at a time when civil servants and most workers are pressing for a salary review, citing high costs of living.

Some people argue that Zimbabweans are lowly-paid compared to regional neighbours, something Dr Mangudya dismissed saying most civil servants in the region were paid lowly compared to what people in this country were earning.

On the economy, Dr Mangudya said Zimbabwe should invest heavily in three growth areas — tourism, mining and horticulture — to turnaround the country's economic fortunes.

He said Zimbabwe was a giant which was now awakening and there was need to invest more money where there was competitive advantage.

"For the country to move forward, there is need for rebalancing and resizing of almost every sector of the economy.

"We need to invest heavily in growth areas like tourism, mining and horticulture. I totally agree with Minister of Tourism and Hospitality Industry, Engineer Walter Mzembi that Victoria Falls should be the tourism hub of Africa. We should be visionaries. We need to have cable cars in Victoria Falls just like in Cape Town, South Africa and Singapore.

"We need to improve on our exports, especially in mining. We cannot continue exporting unprocessed minerals like what is happening to diamonds. Zimbabweans should benefit from the country's rich resources. We can do it as a nation than to fold our hands and cry for Direct Foreign Investment. If the investors come, they will simply take our resources and leave us with nothing. Some of the investors do not bank locally and we will continue suffering yet they will be developing their own economies and countries," he said.

Dr Mangudya attributed some of the challenges the country was facing to lack of competitiveness.

"We have dollarised the economy and this is affecting our competitiveness. The American dollar is appreciating against major currencies and this will make our economy a very expensive one. We are attracting more imports than exports because it is proving to be cheaper to import. We are not producing and we cannot be expected to be competitive," said Dr Mangudya.

He said mark-ups in business were too high and this would in turn affect the pricing of most goods and basic necessities such as water and electricity.

"Most businesses were used to the hyper-inflation era and their mark-ups are very high. We need to change the pricing structures otherwise we will continue importing.

"There is lack of confidence in everything that we do. This also affects business confidence. Lack of confidence breeds poor perceptions. We have wrong perceptions, which lead to high country risks. Line of credits will become very expensive because very few investors will want to put their money where there are high risks," he said.

Dr Mangudya urged Zimbabweans to embrace bond coins, saying he was happy with the uptake so far.

"Bond coins are not equivalent to rands. They are stronger because they are pegged against the US dollar. It is surprising that people who wanted to be assisted in getting value for their money are resisting the bond coins. Consumers are being abused when it comes to the issue of change. In actual fact we have realised that some shop owners are resisting the bond coins because they were benefitting from forced sales. Businesses want super profits," he said.

Dr Mangudya said some companies are closing because of poor governance.

"Company closures should not be blamed on the state of the economy alone. Poor governance is one of the major contributing factors. Gone are the days of business as usual approach," he said.