Harare - As the world watched Zimbabweans take to the streets in a fairly unprecedented move, those on the ground are more phlegmatic about the situation.
Zimbabwean entrepreneur Adam Molai, who is chairman of Savanna Tobacco and is also opening a Pepsi bottling plant in the country, says the world has placed an inordinate amount of attention on Zimbabwe because of the recent protests – protests he says were blown out of proportion but nonetheless saw looting and police brutality.
Zimbabweans, says Molai, are a peaceful people and the country has huge potential to grow. He argues the amount of attention the country is getting is commensurate with the opportunity in the market.
Depending on who you ask, the protests – which have been halted due to a legal injunction – were either a flash in the pan, or the start of something more serious.
Protests over a lack of service delivery, government repression, high unemployment, widespread corruption and delays in civil servants receiving their salaries started in July.
Towards the end of August, they escalated with Zimbabweans taking to the streets in Harare. There were reports of looting, and police brutality. Some argue the protests were nothing compared to what South Africa sees on a daily basis, as there was only one rock in the road, and one tyre burnt.
Standing up
Yet, the protests are – a Zimbabwean journalist says on condition of anonymity – a sign that citizens have finally had enough.
#ZimShutDown2016, #Tajamuka and #ThisFlag were trending on Twitter as Zimbabweans called for President Robert Mugabe to step down.
Unlike in SA, protests are planned very well in advance, and this is communicated widely so people know what to expect. In addition, the country has no qualms about shutting down communication systems to stop so-called insurgents from causing trouble; social media having being blamed for much of the uprising, a la Arab Spring.
Read also: Zimbabwe’s Mangudya: ‘We messed up’
There is no doubt that Zimbabwe is going through an incredibly difficult time.
It is facing a cash crunch because it relies on money it doesn’t print, and Zimbabwe Reserve Bank Governor John Panonetsa Mangudya’s solution to introduce a new currency has not exactly been met with open arms. Many fear it will take the country back to hyperinflation days.
Mangudya explains the introduction of bonds is being done cautiously, and through an export plan that mitigates inflation risks. The governor explains exporters can earn up to 5 percent of what they’ve exported once the cash lands in the bank. The Reserve Bank, he explains, will deposit the amount in the form of bonds into the bank. This currency trades on par with the dollar, and the account holder can choose their currency on withdrawal.
Mangudya explains this will increase cash reserves in the country, as money circulation will go up, reducing Zimbabwe’s reliance on dollars. In addition, it will incentivise exports, which will bring more money into the country, he says.
Exports, says Mangudya, are his “printing press”. He explains the system will not lead to hyperinflation because the amount of bonds introduced is on par with the amount of dollars earned from forex through exports. And, he adds, the ratio is fixed at 5 percent of exports.
This, he says, will give Zimbabwe room to breathe. “We are foolish people, we made mistakes, this is the fixing period.”
In addition, Mangudya says, once the country’s reliance on a currency it does not print is lower, interest rates will drop. Currently, Zimbabweans pay as much as 23 percent on a bond. This will also stimulate the economy, as cash is freed up, he says.
Mangudya anticipates $200 million to be added to the economy a year through exports alone. While this is a drop in the ocean compared to the $14 billion economy, he says this system will have a multiplier effect.
“There are plenty of opportunities here.”
Limited imports
undefinedAnother way Zimbabwe is aiding the economy is to allow limited imports. Imports are now categorised on a necessity basis, explains Mangudya. This keeps forex in the country, and encourages industry.
At least one Zimbabwean company has reaped benefits from this plan.
Zimbabwe’s largest stationery producer, Rank, is currently benefiting from Zimbabwe’s import limitation policy, as it has grown plastic manufacturing capacity from 25 percent in January to 80 percent currently, while book production has gone from 40 percent to 100 percent, around the clock, says FD Ketan Naik.
Last year, the company had a large boost when government imposed an effective 60-percent duty on imported books, says Ketan Naik. On the back of this protection, the company has introduced a new line to make counter books because imports are too costly, he notes.
Ketan Naik says the company struggled in the last five years, and he is glad things are turning around. The group now aims to expand its distribution, and even export to SA in the future, he says.
Indeed, Molai says Zimbabwe has great opportunities to grow. He sees opportunity to add to his empire, boosting the value chain and moving into new areas such as tomato-growing.
Certainly, the Zimbabweans IOL met were hard-working, and pleasant and fairly optimistic about the country’s future.
And local companies have big plans. Savanna Tobacco aims to steadily expand across the continent, and take on the likes of British American Tobacco.
Perhaps Molai is right when he says what is needed is to build a bridge between the government and the private sector. Perhaps Mangudya’s plan to boost local industry will pay off.
* Nicola Mawson was hosted in Zimbabwe courtesy of private enterprise in SA.
IOL