The Oracle
Cynics and pessimists alike are playing blind to the massive opportunities that Zimbabwe is now offering since the advent of the new political dispensation, which also ushered in a new economic order in November last year. Markets rarely lie, or give the wrong signals. Consumer confidence seems to have magically returned and the ED Government must build on that trust and ride the rising wave. Is this mere coincidence or is it a strong sign that Zimbabwe is now really open for business.
One swallow does not make a summer?
Very true as the popular adage goes.
However, when an observer is clearly seeing swarms of swallows in the skies, he or she is inclined to get the certain feeling that summer has arrived. With a measure of confidence, we can certainly begin to apply this kind of thinking to Zimbabwe’s current economic situation, which we all agree had become quite dire, especially towards the tail end of 2017.
Inflationary pressures had resurfaced, reigniting fears of the 2000 to 2008 hyperinflation “horror”. The parallel market “exchange rate” collapsed almost 100 percent, while the stock market and other asset prices soared in local dollar terms, as investors sought refuge outside the monetary system. There were intermittent shortages of “cooking oil” and “motor oil” and a few other essential goods as panic buying gripped the economy.
Suddenly, a more than month before the end of the year, the tide swiftly turned. A new season happened upon us and lo and behold, seven months on, the changes are still coming through and positive signs are abound.
The corporate sector seems to give us the surest indications yet that things are on the mend. Earlier this year, for the first time in three years, Delta Corporation reported a surge in its third quarter volume sales and a jump in profit. This was a complete reversal of fortunes, following successive annual declines in volumes and turnover since 2013. The trend was carried into the final quarter of the year with Delta’s final numbers released in April 2018 showing as much as 18 percent jump in profit after tax following a 17 percent increase in volumes on a year to year basis. Quarterly growth figures on the same metrics were upwards of 50 percent; a significant turnaround. According to Delta’s statement accompanying its numbers, the performance was due to “strong consumer demand, -a continuation of the positive trends witnessed in the previous quarter”.
Shortly soon after Delta reported its impressive earnings and volume performance, another of Zimbabwe’s largest companies, Econet Wireless followed up with an equally impressive set of financial results.
Econet Wireless Zimbabwe profitability jumped a massive 265 percent year on year from $37 million to $132 million for the year ended 28 February 2018 with top line revenue leaping 33 percent from $622m to $832m. In tandem, Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) rose 52 percent. Subscriber growth was reported to have grown 11 percent.
General Beltings also reported a strong set of results; 35 percent volumes growth leading to a 23 percent revenue growth outturn. In the services sector, African Sun reported robust growth in room occupancies, which were up 53 percent from 43 percent in the prior year, anchored particularly on strong foreign arrivals (17 percent growth) and a keen domestic tourism market saying in its trading update that “the year 2018 started on a high note with the new dispensation positively influencing the increase in foreign tourist arrivals”
More recently, sugar processor and distributor, Star Africa, cement manufacturer PPC, also reported robust recovery and significant upward trends in both volumes and profits.
It is safe to conclude that all these positive results are being driven by consumer demand in the economy and the trend is becoming an established one.
Strong consumer demand is what every economy is built on and its exactly what every company dreams of. The question is what is driving the real growth. Are economic fundamentals shifting into positive gear?
There is general agreement that in the context of the new economic order which is being pushed by the country’s President, some of the many positives in various pockets of the economy are being driven by “positive sentiment”
Positive sentiment is a powerful economic force, and given the 2018 economic outlook being put forth by most if not all companies, it appears that the mantra that “Zimbabwe is Open for Business” is not just an empty statement, but has had a seriously positive impact on the economy.
Let me round off by saying “Cape Diem”-Seize the Day. Zimbabwe is indeed open for business and must remain so if we are to see the continued revival of Zimbabwe’s economy. The Oracle says “So far so good”
The writer is an economist and can be reached on oraclefiles@gmail.com.
