Emmerson Njanjamangezi, Group Features Editor 
INCREASED demand for foreign currency to fund operations and import raw materials, as well as plant and equipment, is weighing on the competitiveness of local industry, business leaders have said.
This also comes as the government has lifted restrictions on the importation of basic goods, including duties and taxes, which is also threatening local industry.
In an interview this week, the chief executive of the Zimbabwe National Chamber of Commerce (ZNCC), Chris Mugaga, said 85 percent of costs for local industries were now in hard currency.
Christopher Mugaga, the ZNCC chief executive officer.
“If you are to do a cost build-up analysis to see the profiling of US dollars to Zim dollar, you will see that almost 85-90 percent of the costs per unit are US dollar costs for most companies in this economy.
“And what makes it quite unfortunate is that this cost build-up is for domestic production of goods. Once the companies then start importing, its 100 percent US dollar.”
Mugaga said the only costs to that companies are still exposed to ZWL remain to honour statutory obligations and to a certain extent remuneration costs.
“In terms of plant and equipment and fuels, I think we all know it’s a fully dollarised economy in that space. Therefore, we can say that the economy has to a stronger extent moved towards US dollar bias.
“ZWL still remains a surrogate currency to the US dollar. In other words, people are trading in ZWL whilst at the back of the mind they are seeing a US dollar,” Mugaga added.
Reached for comment, founder and chief executive of the Buy Zimbabwe campaign, Munyaradzi Hwengwere, said local companies were in a difficult place.
“The truth is that local industry finds itself between a rock and a hard place. Businesses have always tried to keep their salary bills within 30 percent of total costs, but in Zimbabwe today it’s a problem because workers are now demanding wages in US dollars.
“When the forex component of your cost of operation increases, it means your total share of foreign currency demand increases. This has put enormous pressure on companies.”
Hwengwere said a number of local businesses were failing to keep costs at a ratio of 50/50 blend between ZWL and hard currency.
“But with what has been happening with the rate, to retain you may be forced to adjust upwards to that, which means that the components of what you pay in foreign currency then increase.
“Fuel in general terms has always been charged in US dollar. With the power shortages where businesses have to use generators, the consumption of fuel goes up, which increases costs.
“The long and short of it is that when there is an imbalance and there is a greater demand of foreign currency, your business must also generate foreign currency otherwise the demands upon the business become unbearable,” Hwengwere further said.
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