The Sunday Mail
Victoria Ruzvidzo
The past six months have presented formidable challenges that have left the economy staggering in a few instances, but it remains standing.
This has not been peculiar to Zimbabwe, but worldwide, economies have gone through a rough patch. The United States has had to fight high inflation and shortages of basics like formula milk.
A combination of the effects of the Russia-Ukraine tiff, Covid-19 and other vagaries have compounded global economic challenges and the outlook is not as bright as earlier envisaged.
Supplies of key commodities have been disrupted by the military operation in Ukraine while Covid-19 resurgence in China and other countries and now monkey pox have unsettled most countries. The International Monetary Fund has had to revise global figures.
Back home, the largely unstable local currency has presented immense challenges, threatening to unwind gains recorded last year, but stability is slowly returning.
Government has moved in to introduce a number of measures to induce stability. We have begun to witness the positive effects.
Resilience has always been the operative word in this economy.
The people and the environment are die-hards. This has always made a difference in such times as these when internal and external shocks have threatened to sink the ship. But this ship called Zimbabwe refuses to give in time and again.
Prices of basic goods and services have gone up by largely unjustifiable margins and the ordinary consumer feels the pinch.
Government has implored manufacturers and wholesalers to slowdown and behave more responsibly. We hope this word has reached home.
Inflation, which subsided significantly last year, rose to 72,7 percent in March from 66,1 percent previously.
The pressure has been on. And the sad reality is that inflation often fuels inflation, hence the need for urgent action to tame the scourge.
The more prices go up the more the market begins to hoard and behave in a manner that strokes the inflationary pressures. Artificial shortages resulting from hoarding result in further price increases for the available goods and the story goes on.
Government has in the past month announced a slew of measures to arrest exchange rate fluctuations and price instability.
The introduction of the willing buyer-willing seller rate has helped the situation, with the interbank rate and the auction rate converging. This past Tuesday the latter was slightly above the former at$308,50 and $301, 50 respectively.
That interbank transactions continue to grow by the week is a good indication that more transaction is happening on the legal market, starving the parallel market that has been a source of the major setbacks in the economy.
Furthermore, new payment terms for major contractors where they are now paid half in foreign currency and the other half in staggered RTGS payments is a strategic move that should fix challenges from that end. A few weeks ago the Reserve Bank of Zimbabwe said it got wind that some contractors were dumping huge volumes of the local currency onto the black market, inducing volatility.
“What is driving the exchange rate is speculative behaviour and some actions of monopolies that we have seen. We have two critical steps. One is to say contractors using the following formula: 50 percent in US dollars and the 50 percent in Zimbabwe dollars.
“The second one is that on the Zimbabwe dollar portion, we spread it out. Not spread it all at once but in bits and pieces to make sure it doesn’t find its way as a lump sum into the parallel market,” said Finance Minister Professor Mthuli Ncube.
Furthermore, speculative behaviour by some firms that moved large volumes of cash to the black market were being watched closely. Last month the central bank had to temporarily suspend borrowings from banks by Government firms and individuals as it sought to establish the source of heightened parallel market activity.
The President last Sunday read the riot act to non-performing parastatals which have largely been a drain to the fiscus. The chickens are coming home to roost for many of those caught napping.
Increased production in all sectors of the economy and ongoing infrastructure development should ease pressure in the economy as the year progresses.
The month of June, which marks the half year spot, engenders reflection and review as we enter the second lap of the year.
It is the right time for firms, individuals, Government, the Cabinet and all of us to introspect, ascertain progress and seek to redress some aspects as we focus on targets set out at the beginning of the year. As alluded to earlier, for Zimbabwe the past six months have been challenging but the course is expected to change significantly through a number of measures already in place and those that need to be tweaked s the year progresses.
The 5,5 percent growth target for this year is still in sight regardless of the meanders the past six months have had to endure.
Recalibrations, reorientations, readjustments and redirections are often a necessary part of our journeys, or odysseys. We reflect on what would have transpired, benchmarked against what we would have conceived. Typically, things do not always work the way we want them to but there is always opportunity to patch up.
As we reflect, we must not lose sight of the gains made so far. This gives us the energy to achieve more.
Infrastructural developments are very noteworthy. Roads and bridges continue to be built and maintained, not only improving our road infrastructure but employing thousands in the process. Very encouragingly, almost all the companies doing road construction are local ones. This is a positive development which also augurs well for foreign investment and capital. Infrastructure is invariably a prime consideration by investors and such Government efforts are laudable.
To be frank, the Second Republic inherited an economy that was fraught with complex challenges. A lot of competing issues begged attention. That easily discernible progress in many sectors is being made is to its eternal credit and we salute these efforts.
These positives, solid ones at that, do not discount the negatives we faced obviously.
We cannot overemphasise that decisive action should be taken against all culpable persons, serving as a warning to those who are like-minded. Again transparency and accountability are the hallmarks of such an exercise, none is exempt, as the President said.
So, currency stabilisation is a priority. We continue to escalate capacity utilization. That it has reached 60 percent is no mean feat.
Transportation still needs to be improved. This is one of the pain point of the ordinary man and woman. Zupco plays a key role here. While it is doing its part, further capacitation is envisaged. As more buses come in, the situation should be remedied.
The other players in the transport sector must meet minimum requirements to operate illegally again.
Overall, the economy is set to gain traction in the second half. We carry a story in our Business Section in which company executives are upbeat about the economy.
Such firms as Delta Corporation, the country’s largest beverage manufacture, is confident that demand for its products will be firm.
First Mutual Properties says the favourable economic outlook is expected to stimulate demand for high quality real estate.
The Infrastructure Development Bank of Zimbabwe is optimistic projects under implementation will be completed this year and that it will underwrite more business through its private sector funding arm.
Key foreign investors have also labelled Zimbabwe a “Buy”. The see great potential in the economy and a number of them have not hesitated to bring in the dollars and the accompanying job opportunities.
Indeed, the glass is half full not half empty.
In God I Trust!
