Zimbabwe Situation

Govt hailed for keeping economy on track

Source: Govt hailed for keeping economy on track | Sunday News (Business)

Mr Sifelani Jabangwe

Dumisani Nsingo/Wilson Dakwa, Business Reporters
THE year 2017 will mostly be remembered for Government’s bid to rescue a country facing a volatile economic situation.

Captains of Industry and economists interviewed by Sunday Business pointed out that the country’s economy performance threatened to spiral out of control in 2017 but a number of supportive and intervention measures taken by the Government managed to keep it in check.

Confederation of Zimbabwe Industries (CZI) president Mr Sifelani Jabangwe said the introduction of the Government’s Special Maize for Import Substitution Programme, popularly known as Command Agriculture played an integral role in improving the supply chain and demand in the manufacturing sector.

“Zimbabwe has experienced an improvement in terms of economic performance this year compared to last year due to initiatives which the Government put in place. Command Agriculture increased business for suppliers of items such as protective covering bags and demand also increased.

“Other supportive measures such as Statutory Instrument 122 of 2017, which the Government put in place have reduced the number of products that require export licences, with the only products that still require export licences being fertiliser, raw and refined sugar, gypsum and second-hand equipment. All this promoted industries’ competitiveness and ease of doing business,” said Mr Jabangwe.

He said the projected 4,5 percent economic growth was buoyed by the successful track record of the Command Agriculture Programme as the country underpins its economic recovery through improved agricultural production.

“The performance of Command Agriculture among other factors will largely bring about growth in the nation’s agriculture sector, which is one of our major foreign currency generators. Industry players’ response to the measures, which the Government has put in place will also influence the achievement of the projected economic growth,” said Mr Jabangwe.

He applauded the new political dispensation for its efforts in addressing the ills and challenges in the business community such as corruption, externalisation and high cost of doing business further stating that such strides would pave way for investment into the country.

Bulawayo-based economist Mr Morris Mpala reiterated Mr Jabangwe’s sentiments on the positive role played by the Command Agriculture Programme but hinted that the country’s economy performance in 2017 experienced periods of fluctuation.

“It (2017) was a bit of a roller coaster with the Command Agriculture doing well because of the good rains and the Government’s effort. On the other hand we still had inflation and price increases, shortage of hard cash and foreign currency as well playing a major role,” said Mr Mpala.

Economic commentator Mr Butler Tambo said 2017 was the most difficult and unproductive year for most companies in the country since the dollarisation of the economy in 2009.

He said a number of critical industries are faced with collapse under the burden of worsening foreign payments gridlock (as nostro accounts are dry and the Reserve Bank of Zimbabwe fails to pay foreign suppliers of raw materials on time in real currency) culminating in key imported raw materials running out at most companies around the country.

“Most companies have to buy foreign currency on the black market paying huge premiums of up to 75 percent on their bank balances as they fail to access their forex from banks. This has led to most manufacturers and more pronouncedly retailers hiking their prices to ridiculous amounts, some as high as trebling the prices from what they were beginning of the year in order for them to offset the high premiums they are paying to obtain forex on the illegal black market.

“This has had the effect of raising the cost of living and creating inflationary pressure on the economy which just a year ago in 2016 was in a deflationary mode but fast forward 12 months later the country is now facing high inflation, the first time after the introduction of the multi-currency regime in 2009. This situation has not only backed manufactures and retailers into a corner but it has also further impoverished an already struggling majority,” said Mr Tambo.

He said it was of paramount importance that the Afrexim Bank $600 million nostro accounts stabilization fund be released soon so that outstanding foreign payments especially for the productive sector could be honoured expeditiously to enable companies which have been importing raw materials for production to remain afloat.

South African based Zimbabwean economist Dr Bongani Ngwenya said the country’s economy has been on a downward trend since 2013.

“It’s very clear to everyone that the country’s economy had been on a downward spiral from 2013 after experiencing some positive growth from the Government of National Unity. Remember the situation got worse from the last quarter of 2015, the whole of 2016 and 2017 when we saw the country experiencing serious liquidity problems.

“The worst scenario was the disappearance of the US dollar as Bond notes were introduced in the market. This phenomenon is not surprising.

Naturally when pseudo currency is introduced in the financial system real currency tends to vanquish through or largely due to the tendencies to hoard and externalization,” said Dr Ngwenya.

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