Confederation of Zimbabwe Industries (CZI) said that the growing Real Time Gross Settlement (RTGS) is posing a danger to cash-strapped Zimbabwe.
The industrial body states that the RTGS which was previously growing gradually has become rapid.
“The danger is that the RTGS balance is not supported by real money, but is chasing the few available dollars, resulting in the parallel market for currency” states CZI in an article entitled 2018 National Budget Transformative- An Analysis.
“In 2010 liquid cash and nostro balances, notes and coins were high but dropped to 400 million by 2014 and slid further to $200million in 2017. This movement is demonstrated by the cash shortages in the market”
On trade, the Confederation states that the economy is spending 20% of its foreign currency on fuel and this is related.
“In 2010, the manufacturing sector generated $1 billion, and this has come down by about 50%, with manufacturing now generating only $500 million,” CZI analyses on export perfomance.
“Food is about 10% of imports and although this is commendable, more can be done to bring this figure down.”
Zimbabwe recorded a US$614 million trade deficit in the first three months of this year.
CZI analysis shows that credit to the private sector is not growing for the past two to three years, which means the economy is not growing.
“Government has been the major consumer of credit through its consumptive expenditure and this is not good for the economy” Zimbabwe’s industrial body states
“There is need to move away from consumptive expenditure to local production for PAYE and company tax to grow, thereby increasing revenue generation”
“While government has made the right noises regarding corruption, it would do even more by using e-technology to reduce human interface in most processes there by reducing the temptations for corruption.”
Finance and Economic Planning Minister Patrick Chinamasa presented the 2018 budget last week which gave hope for Zimbabwe’s economic recovery.
CZI is an organisation for industries in Zimbabwe that has been in existence since 1923.