Industry battles fresh wave of widespread anxiety

PHILLIMON MHLANGA Local industry is battling a fresh round of widespread anxiety with increased levels of stress centred on currency exchange losses as a result of Zimbabwe dollar weaknesses , uncertainty, high production costs and the agonizingly high rate of annual inflation that has been ravaging the economy in recent months, among many other challenges, Business Times can report. The economic outlook for Zimbabwe appears to be getting worse, according to many business executives. Econet Wireless Zimbabwe board chairman, David Myers said: “The group’s financial performance has been weighed down by foreign exchange losses stemming from foreign currency denominated obligations.” Listed agro-industrial concern, Ariston Holdings chairman Alexander Jongwe said the group posted an operating loss before interest and tax of ZWL$1.4bn in the first half of the year driven by unrealised exchange losses. “The loss position is mainly driven by unrealised exchange losses arising from US$ denominated liabilities. Inflation adjusted interest expense increased by 310% to ZWL$298m in the current reporting period. This was mainly as a result of an increase in borrowings held during the current period,” Jongwe said. The Zimbabwe dollar has been under intense pressure and severe instability in the first half of the year as a result of economic problems. Although the Zimbabwe dollar has been strengthening recently, trading at ZWL$4 571 to US$1 this week from ZWL$6 713 in June, the local currency on the official market lost 560% of its value relative to the dollar between December 2022 and July 2023. As the effects of strict fiscal and monetary measures take hold, Zimbabwe’s annual inflation rate has decreased from 101.3% in July to 77.2% in August, but it is still among the highest in the world. The term inflation refers to the rate at which prices are rising. However, a decline in inflation does not imply that prices are falling but rather that price adjustments are proceeding slowly. Industry leaders yesterday told Business Times that yesterday’s elections added to the already unprecedented levels of economic anxiety and uncertainty. According to them, the majority of post-election policy risks depend on monetary policy, particularly the trajectory of the local currency and its function in the current multi-currency basket. They claimed that local businesses have been under a lot of stress as a result of the elections. There is an increasing worry that policies might change once the election results are known. The Zimbabwe Electoral Commission (ZEC), barring any unforeseen events, is anticipated to announce the results of the harmonised elections held yesterday before the end of this month. Captains of industry claimed that stress related to elections was moderately significant. Many are hoping that the results of the elections will provide a fresh start for the local industry, which is suffering from a crippling economy that has rendered them incapacitated. The election results will usher in a new President, 210 members of the National Assembly, and 1,958 councilors as the Zimbabwean economy continues to battle against strong headwinds. There were 11 candidates vying for the presidency. While President Emmerson Mnangagwa maintains his frontrunner position, his chief opposition is Nelson Chamisa, the leader of the Citizens Coalition for Change (CCC). Others are Joseph Busha of the Free Zim Congress, Trust Chikohora of the ZCPD, Blessing Kasiyamhuru of the United Zimbabwe Alliance, Elizabeth Valerio of the United Zimbabwe Alliance, and Professor Lovemore Madhuku of the NCA . Wilbert Mubaiwa of the NPC, Gwinyai Henry Muzorewa of the UANC, and Harry Peter Wilson of the DOP were also competing for the Presidency. MDC-T leader Douglas Mwonzora pulled out of the presidential race citing unfair and discriminatory treatment from the electoral body , the Zimbabwe Electoral Commission a few weeks ago, but his name still appeared on the ballot. ZEC said it was too late to remove Mwonzora from the ballot paper as he missed the 21-day notice period.

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Industry battles fresh wave of widespread anxiety

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