HARARE, May 5 (The Source) – The Confederation of Zimbabwe Industries (CZI) on Monday warned government of excessive use of treasury bills (TBs) to raise money on the open market, saying this could starve the private sector of the limited available funding.
Last month the government issued TBs worth $103 million to clear the central bank’s debt to banks and farmers which accumulated during the pre-dollarisation period.
The government has generally used 90-day instruments.
“The concern we have is that this may tend to crowd out credit for private sector if (TBs) are used excessively as a means to raise funding for government activities,” CZI president, Charles Msipa told Parliamentary portfolio committee on finance and economic development.
Zimbabwe is in the throes of a cash squeeze, but Msipa said government should reduce its reliance on local capital to finance its deficit as it would mean less money for lending to companies in the productive sector.
Msipa said challenges facing the local industry included the liquidity crunch, lack of competitiveness of locally produced goods, aged infrastructure and power cuts.
He added that banning cheap imports without supporting the local industry to fill the supply gap would not help revive the companies but cause further deindustrialisation.
“We need to have a better plan of restoring competitiveness of the local industry. Utilise the tax funds to make the local industry competitive,” he said.
He urged government to create an enabling environment where business can grow and reduce the country risk that affects the cost of capital.
Responding on a question on the labour laws, Msipa called for production-linked wages and for the laws to be flexible to enable employers to retrench where necessary to remain viable.