Johannesburg - Zimbabwe’s manufacturers asked the government to cut taxes and mint coins to boost demand for local goods, stimulate the economy and help reduce the perception of risk in the economy.
Local currency coins, paired with the current multi-currency system, would boost local trade, the Confederation of Zimbabwe Industries said in a letter to the government obtained by Bloomberg News. The government should also cut income and value-added taxes to promote spending and boost production, the Harare-based group said.
“Currently the high cost of production is rendering local goods uncompetitive,” the group said. “There is need to stimulate consumption in the local market.”
Zimbabwe needs to manage perceptions of political risk to businesses and restore confidence in the financial markets to extend four years of economic growth after President Robert Mugabe was re-elected on July 31. Mugabe plans to seize control of foreign-owned mines without paying for them and pay for stakes in banks as part of a programme to accumulate $7-billion in assets for blacks, Saviour Kasukuwere, the minister in charge of the programme said on August 6. The stock market has plunged 21 percent since the polls, according to data compiled by Bloomberg.
Since disputed elections in 2008, the government dropped the Zimbabwean dollar for the rand and US dollar in 2009 to help quell inflation that soared to an estimated 500 billion percent. There is often a shortage of smaller-denomination bills in the foreign currencies, making it harder to do business. The economy shrunk 39 percent in the eight years through 2008 after Mugabe began a campaign to seize white-owned farms to redistribute to black subsistence farmers. - Bloomberg