Zimbabwean companies – among them the local unit of South Africa-listed Nampak – are holding their breath as business uncertainty pervades the southern African country ahead of elections next week.
Bitter disputes, most of them spilling into the courts, over the electoral framework have marred Zimbabwe ahead of the August 23 poll.
The Zimbabwean election comes against the backdrop of sustained weakness in the Zimbabwe dollar, elevated inflation and fast paced dollarisation.
The main opposition Citizens Coalition for Change charges that President Emmerson Mnangagwa’s ruling Zanu-PF party is abusing the judiciary and other state arms to side-line and frustrate rivals ahead of the crucial poll.
Some of this uncertainty is now impacting on business confidence, muzzling business certainty. Industry executives are now looking to the post election period to refocus strategies and operations.
Seed-Co, a Zimbabwe and regional seed manufacturer, said yesterday that it anticipated the current economic uncertainty to improve after the elections.
The Zimbabwean central bank has been tightening money supply and this has throttled purchasing power and disposable incomes.
“Presently, the Nation is focused on the upcoming elections, and we expect a more stable socio-economic environment, soon after the elections, that is more conducive for business and general economic activities to thrive,” the company said in a trading update.
Although hospitality companies such as hotels, restaurants and conference facility providers have been recording a pick-up in business, industry and manufacturing companies are feeling the pinch of business slow-down ahead of next week’s election.
Zimbabweans will pick up a new legislature, fresh local authorities and a new President. For Nampak Zimbabwe executives, “the operating environment remains uncertain given that the election season” is on the horizon.
The rapid changes in currency regulations in Zimbabwe resulted “in the differences between the reported financial information and the numbers submitted to the parent” shareholder for Nampak Zimbabwe.
With electricity supply having improved, giving a boon to local companies, bricks manufacturer, Willdale, said yesterday that a tight liquidity situation would only improve after the elections.
Analysts argue that Zimbabwe is throttling liquidity to control inflation and an implosion in the exchange rate ahead of next week’s election.
“It is expected that the liquidity situation will improve post general elections. The company will continue to leverage on its capacity to dominate the market and sustain margins,” said executives at Willdale.
Seed-Co said, “Liquidity challenges in the market are expected to continue as authorities try to anchor” the local currency.
“Tight liquidity management is, however, negatively affecting the availability of productive working capital for businesses as well as aggregate demand,” the seed manufacturing company said.
Nicolas Delaunay, the southern Africa director for International Crisis Group, said yesterday that ahead of next week’s election, the majority of Zimbabweans “are enduring ever greater hardship amid a rising cost” of living.
“A series of policies aimed at boosting economic growth and the reintroduction of a Zimbabwean currency have failed to improve the country’s fortunes. Meanwhile, several senior officials have been named in corruption scandals.”