PHILLIMON MHLANGA
Captains of industry have warned of dire consequences for the government if it continues disrespecting market fundamentals.
Zimbabwe’s economy is currently battling high inflation, haemorrhage exchange rate and currency volatility.
CEO Africa Roundtable board chairman Oswell Binha said markets are central in government decision making.
He said the continuous economic meltdown has seen the majority of Zimbabwe companies closing, expanding the corporate graveyard in the past few years.
“These guys called CEOs are in trouble,” Binha said. “The mortality rate of industry will continue. I don’t know what accountants are doing because we need to get the reports. And those financials need to be clear so that they are not qualified. In this current scenario, it’s not clear where we are going.
“If government is to sort this monetary lockjaw, fiscal lockjaw, markets are central in decision making. To the Government, my advice is that it doesn’t matter how much pronunciation you make. It doesn’t matter how many mega deals you are signing. At the end of the day, the success of any monetary regime and fiscal regime, is on the basis of respecting market fundamentals,” Binha said.
“It’s important to understand that when you read more of arbitrage, more of cartels, more of cross border crime, it’s an indication of weaknesses of some of the institutions. And the government needs to respond to that.”
Binha said elections due in July or August this year should not come as undeclared war as that would have consequences for the economy.
“If all our elections are going to be undeclared war, it does not give me the same security. Whether I am corporate Zimbabwean or individual Zimbabwean, it is important to take note that whoever is going to be a political protagonist, wanting to take political office, this phase, for a change, becomes normal.”
“Once, it becomes normal, we all Zimbabweans move. It is important.”
Economist Gift Mugano also painted a grim picture saying inflation will be on an upward trajectory.
“By mid-year it will hit 400%. Exchange rate is going to run away,” he said.
Mugano said ZWL$4.5 trillion budget was an “election budget” and there was no transparency or genuine intention by the government.
“How do you explain the fact that the Ministry of Finance and Economic Development allocates itself a budget which is more than ZWL$200bn. The budget is even more than that of the Ministry of Industry and Commerce and Lands, Agriculture, Fisheries, Water, Development.
In one meeting, I challenged the Ministry of Finance and Economic Development saying why would you hold a bigger purse than the Industry of Commerce and Agriculture ministry’s when you are the Ex-Chequer. And the response was that we want to respond to emergencies.
“But, there is no cholera, no cyclone, and such big emergencies. It’s clear and I see an election fever coming in.
What we see is that our systems are dead. You look at the hospitals, they are dead, you look at our industry, its dead. You look at the supermarkets, they are dead, there is no demand.”
Mugano said credible elections were key for economic growth.
“What we want are credible elections, it’s very important. I don’t think Zimbabweans care much about who comes into office. They care about how you get into the office. So, violence free elections are very important and critical for this economy to move forward,” he said.
CEOs said companies are battling to extricate themselves from the woes as government intervention in the economy has not improved market performance. Instead, the economy is showing signs of deep crisis and high degree of uncertainty.
Poor policies, the business leaders said, have resulted in prices of raw materials and other goods rocketing, high inflation, meaning industry is now battling excessive costs of production.
Annual inflation rate for January 2023 stood at 229.8% from 243.8% in December.
Zimbabwe’s inflation rate is one of the highest in the world.
Currency and forex management systems have also caused more pain to business and the citizenry.
The Zimbabwe dollar this week plunged again to ZWL$801.60: US$1 from ZWL$671.44: US$1 in December 2022.
On the parallel market, the Zimbabwe dollar was this week trading at ZWL$1 300: US$1.
