IT’S reporting season again and big corporates in Zimbabwe are giving their verdict on the health of the economy.
Companies that have published their financials to date have applauded the positive developments which have been brought about by the introduction of the multi-currency system and concomitant spin-offs which include a stable macro-economic operating environment characterised by low inflation.
There is no doubt that the business environment in 2009 was a huge improvement from the grind of 2008 and a couple of years before that when business had to endure the rigours of inflation and obtuse government policies which manifested themselves in the form of price controls and bonehead projects to print money to finance patronage projects in farming.
Last year, financials were replete with commentary on the pain company executives endured while trying to avoid arrest and other forms of persecution by the police, the National Incomes and Pricing Commission, and officials from the Reserve Bank.
Running a business had become an act of criminality in Zimbabwe and investors responded with their feet. They took their business elsewhere. Lines of credit dried up resulting in low employment of installed capacity in the manufacturing sector and little working capital for commerce.
This yesteryear anguish is slowly evaporating. The financials published to date are more forward — looking but a common thread is running through all the company reports. The effects of the trauma of the country’s not so distant dark past are still with us.
The coast is not clear yet. A sample of results published this week says it all. Engineering giant Zeco had this to say about the operating environment: “Despite the improvements of the conditions in the operating environment, particularly the stabilisation of the macro-economic fundamentals, business is still facing challenges with accessing financing that is required to restore productive capacity and improve demand for products and services to levels necessary for a sustained increase in capacity utilisation.”
Interfin Merchant Bank on the other hand said deposits were “building at a very low pace” because of the dry market. Coal miner Hwange complained of “limited lines of credit” and Zimre Holdings said “absence of long-term funding negatively impacted on the productive sector activities and the general economic performance of the country”. Principal investment group in this market Old Mutual was more direct on the causes of the problems. It said: “The expected turnaround in the economy was slower than anticipated due to the continued uncertainties in the political environment.”
This is worrying especially seeing the fact that the inclusive government — whose major brief is to foster an environment of sustained economic growth — is not moving at the required speed to solve the issues which are inhibiting sustained economic growth.
The GPA has not yet been consummated in full as Zanu PF and the MDC do not seem to be in any hurry to find a solution to the crisis that is still retarding progress in this country.
In fact, since the coming in of the inclusive government, we have been lulled into believing that the worst is over for Zimbabwe and that normalcy has returned to this country.
It is easy to fall into this utopian mindset especially having emerged from a situation where just getting a loaf of bread was a Herculean task. That shops are full does not mean that the country’s problems are over.
There is no relief on unemployment estimated at above 90% and social services have remained a luxury.
Companies have reported the need to foster an environment of sustained economic growth.
That is fundamental. We have failed to hit the higher capacity utilisation target in industry of 60% as forecast by Finance minister Tendai Biti at the beginning of last year because this country does not simply have the money. It is now clear that lines of credit will not be unlocked without fixing the politics.
This entails behavioural change on the part of our rulers who seem to derive pleasure in flaunting their differences.
The unfortunate story of Zimbabwe is that we still have remnants of a discredited past who continue to blight the lives of people trying to makes an honest living. We do not require in this day and age police who harass journalists for simply doing their job.
It was also unnecessary last week for the police to stop a photo exhibition officially opened by Prime Minister Morgan Tsvangirai. Then to top it all, we have the indigenisation regulations which government is insisting on implementing in the teeth of local and international condemnation.
These are the things investors look at before they bring their monies here and there is every reason for big business to be worried.