Encourage saving: Tetrad

Patrick Chinamasa

By Daniel Chigundu

SEASONED market watchers Tetrad Securities has urged government and the central bank to put in place measures that will encourage the spirit of saving.

According to a Reserve Bank of Zimbabwe (RBZ) monthly economic review for July 2013 demand deposits stood at 53 percent of total deposits while under-30 day, savings and long term savings accounted for 22, 12 and 13 percent respectively.

Tetrad argues that if the status quo is allowed to stand sustainable economic growth might never be realised in the economy.

“RBZ statistics continues to highlight the structural weakness in our monetary base. The persistent dominance of demand deposits compared to long-term deposits has seen the banking sector failing to fund industry needs.

“Our view remains that as long as this mismatch exists, sustainable economic growth may not be attained.

“There is need for the government and the central bank to encourage a savings culture in the economy and also put policies in place that will help attract meaningful lines of credit,” the company said.

Most industries especially in mining, agriculture and manufacturing are in need of cheap long-term funding, which is not available from the financing institution in the country.

In addition, the World Bank recently highlighted that Zimbabwe requires US$11.30billion for electricity, US$1.80billion for water, US$13.39billion for transportation and US$6.75billion for the telecoms sector.

The newly appointed Finance Minister Patrick Chinamasa has also indicated that the country’s industry is in urgent for recapitalise and retooling in-order to make them efficient.

“We are now at an urgent need to increase capacity utilisation, and I am disappointed that as country we have become a warehouse of other countries.

“This has to be reversed gradually but more damage has already been done to the textile industry. As a Ministry we will make an effort to ensure that industry is retooled so that it becomes efficient to compete with others.

“I want captains of industry to start drawing plans for retooling so that when we get resources we can channel using those plans and in the coming months we will introduce policies to revitalise the economy,” said Minister Chinamasa.

The Confederation of Zimbabwe Industries earlier in the year raise concern over industrial capacity utilisation which they say has been on the retreating side since 2012.

In 2008 at the height of economic down-turn capacity utilisation was at 10 percent, while 32.2, 43.7, 57.2 and 44.2 were recorded in 2009, 2010, 2011 and 2012 respectively.

Former Finance Minister in the now defunct inclusive government Tendai Biti had set an ambitious target of 60 percent but failed to achieve it due to a myriad of challenges.

Some of the challenges include expensive but unrealiable water and power supplies, lack of funds for retooling and excessive imports from the neighbouring countries and Asian markets