A UNITED Nations senior official says local manufacturers should take advantage of the strengthening of the United States dollar against the South African rand and import new machinery.
Local manufacturers are dogged by obsolete equipment that has pushed up the cost of production making local products uncompetitive.
But United Nations Economic Commission for Africa executive secretary Carlos Lopes said manufacturers should take advantage of the strengthening United States dollar and retool.
Lopes said one of the key polices for government was to address some of the key distortions presented by the strengthening of the United States dollar.
Government is working on internal devaluation to boost the country’s competitiveness. Internal devaluation is an economic and social policy option, whose aim is to restore the international competitiveness of a country mainly by reducing its labor costs — either wages or the indirect costs of employers.
The use of the multi-currency regime since 2009 has created headaches for the economy, with monetary authorities moaning over the loss of its ability to manage the exchange rate for export competitiveness purposes.
Lopes said national non-bank financial development institutions need to be transformed to provide concessionary finance to the manufacturing sector.
- NewsDay
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