No respite for Zimbabwe's battered economy

Published Jan 20, 2019


MUSSINA - There has been no quick respite for Zimbabwe’s battered economy following four days of a massive protest action against steep increases in the price of fuel, with the Confederation of Zimbabwe Industries (CZI) saying as much as $300 million in production had been lost out and the Zimbabwe Stock Exchange (ZSE) halting trade for two days this week.

Despite the three day protest action and continued tensions sparked by the massive fuel price hike announced by the government, fuel supplies had still not improved and commuter fares were still exorbitant, prompting private sector workers to stay at home while the government said it was providing buses to ferry civil servants to and from work.

The CZI’s Sifelani Jabangwe said Zimbabwe’s economy had lost productive value amounting to $300 million during the three days that there was a full blown protest action during which workers stayed at home.

On Thursday, others had started to resume production but some companies remained closed as workers had no transport to ferry them to work.

"We record about $100 million per day and given that some companies operated on skeletal staff in the last three days, the economy lost could be between $70 million and $100 million per day," Jabangwe said.

This happened as President Emerson Mnangagwa continued with his international state visits, which saw him visit Russia at the beginning of the protests in Zimbabwe. 

On Thursday, Mnangagwa arrived in Belarus, with government officials saying he was looking for investments and a bail-out package “in any form” to help the country emerge out of its current economic crisis.

In Russia, the Zimbabwean leader struck a deal with Alrosa for the diamond mining company,to start diamond explorations. This is despite earlier reports that DeBeers had been allowed to prospect and explore for diamonds in the country, reports which Zimbabwean Mines Minister Winston Chitando has denied.

“It’s not true that we have licensed DeBeers and Vast Resources to explore for diamonds… I don’t know where people got this. We will make the announcements later,” Chitando said this week.

Zimbabwe is desperate for investment to grow its foreign currency position which has seen it fail to pay for key imports such as fuel and medicines. 

Investment experts who work with Zimbabwe fund management companies said investors from other countries have started to shun Zimbabwe. 

They said this was why Mnangagwa was pressing ahead with his international state visits at a time he should have returned home to deal with the crisis.

“The big investors are not having none of this. They are saying sort your mess first and reform. That is the key work Mnangagwa has to do – it’s all about reforms and setting a clear platform for capital to thrive with no disturbance through price controls and policy inconsistency, especially around currency reforms and repatriation of dividends,” said an analyst working with an international investment fund manager in Harare.

The protests in Zimbabwe this week would have widened the risk perception of the country and the government’s inclination towards a local currency unit are seen dampening investor sentiment.


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