Giving a preview of business last year, the president of the Zimbabwe National Chamber of Commerce, Obert Sibanda, said formation of the inclusive government last February brought confidence into the economy, which translated into the corporate world recording positive gains.
“The beginning of 2009 saw the general liberalisation of the economy, the multi-currency framework, the removal of controls and the formation of the inclusive government,” Sibanda said. “All these developments had a positive contribution to business as we were able to plan and budget for our businesses. This was an improvement as compared to the same period in 2008.
The year 2008 was characterised by a number of challenges, among them hyperinflation, industry operating below 10% capacity, companies and individuals failing to access their money from banks and a serious shortage of basic commodities.
Sibanda said most of these problems subsided after multi-currencies were introduced into the country’s payment system.
“The beginning of last year saw inflation going down. Basic goods were readily available in shops at a reasonable prices, although most of the goods were imported, capacity utilisation also increased to about 35%. Although seemingly few, but these are positives that we should note,” he said.
Sibanda however said there were still some problems the business community was still facing.
“There are certain challenges that still need to be addressed such as the issue of capitalisation for businesses. But the challenge in that aspect is that lines of credit are not available, interest rates at banks are high and are for short terms. There are also liquidity constraints whereby goods produced are sold at low volumes as there is not much disposable income,” Sibanda explained.
He also said the cost of production was extremely high and while the local industry was keen to substitute foreign goods with locally produced goods, it became expensive. In addition, locally produced goods were not as competitive as those produced in neighbouring countries.
Another challenge was that the country’s infrastructure was not up to scratch with constant power outages, frequent water cuts and poor road networks, Sibanda said.
He said it was important for the country to be positive in 2010 so as to realise more positive outcomes.
“As this year begins, we need to continue to improve from where we left off. As a country there is need for confidence from ourselves and politicians. Politicians must create a positive impression about the inclusive government and that it will not collapse,” Sibanda said. “Issues such as that of the constitution should also be looked at seriously so that the outside world can look at us and accept that we are in a transitional period and eventually the country’s economy will be stable.”
Sibanda added that another vital issue to look into this year was that of people’s disposable income, which he said need to be increased.
“Business growth depends on income circulation. However, the situation we are facing currently is that money that is circulating is being used for importing goods from neighbouring countries. If production increases, money will then circulate within the country. People should then get reasonable salaries for them to be able to spend and money circulates,” he said.
As at August 2009, the Poverty Datum Line stood at US$454 for a family of six. However, most people, who largely encompass the civil servants, have been earning about US$150. Hence, the government, which is the largest employer, needs to increase people’s incomes.
Bulawayo businessman mogul Delma Lupepe said business was better during the last half of 2009.
“The 2009 festive season was better than the last one as people were making meaningful purchases. Business was going to be even better if people were able to access their money early enough. Most people spent the better half of the mornings queuing for cash at the banks and they began trickling in after 12 noon. In general it was a better festive season than 2008,” he said.
One of the sales managers at Meikles Departmental Stores who spoke on condition of anonymity also said business was better this time around.
“Between January and November 2009 business was quite low, but from the beginning of December business was better as compared to the festive season in 2008,” he said.
The chief economist at the Confederation of Zimbabwe Industries, Lorraine Chikanya, said while business was good her organisation was still collating information to determine how successful 2009 was for the business community.
“We do not have precise information on the performance of industries in 2009 as most industries will only open next week,” she said.