TIGHT liquidity, lack of stability in commercial transactions and low confidence in the economy will prolong Zimbabwe’s economic recovery, Lonzim CEO Geoffrey White says.
White, however, believes the “seeds of economic recovery” are now “evident in Zimbabwe”.
Although Zimbabwe’s economy is still depressed, White says the economy is growing on a month-on-month basis, buoyed by investment from international, public and the private sector investors.
In a statement attached to the group’s interim financial results to February, White said: “Economic recovery from the chaos of hyperinflation will inevitably take time. Confidence needs to be rebuilt, stability in commercial transactions re-established and liquidity needs to be available once again in the banking sector for both commerce and individuals to drive the economy.”
LonZim’s strategy of identifying and supporting key businesses is beginning to yield positive results as each of LonZim’s seven key subsidiaries are now well placed to grow, he says.
White said: “The Company has, where necessary, invested in new plant and machinery during 2009 ahead of recovery which means that each division within LonZim is now operating at a highly professional standard and is not only capable of servicing old and existing business but taking on new business.”
Commenting on its Fly540 airline, White said his company was still keen on airline business in Zimbabwe but expressed worries over low international traffic numbers. Lonzim last year said it would be launching its Fly540 airline business.
“Zimbabwe remains a key target market for Fly540 once international traffic numbers start to build, and the airport at Harare airport is of long term strategic importance as one of the best infrastructure facilities in Southern Africa,” said White.
Apart from Fly540, LonZim also owns 51% of Panafmed after it invested US$2,3 million in the new start up business that imports, wholesales and distributes pharmaceutical products in the country.
White said the supply of pharmaceuticals into Zimbabwe is proving to be a challenge.
“Although distribution had been successfully
established and sales have been realised, this market has proven difficult to operate in. The business model is under review as to the best long term plans to address the opportunities in this market sector” said White.
LonZim made a US$3,57 million loss in the first quarter of the year but management insists it is in line with their expectations. This loss comes at a time when the investment company which wholly owns Leopard Rock Hotel, just outside Mutare, Celsys (60%), Paynet and Fly540 (90%) among other companies grew its turnover to US$4,02 million from US$743 348 in the same period.
Revenue growth reflects the benefits of acquisitions completed last year, the effects of dollarisation and continued economic growth, the company says.
Strategic acquisitions have seen the company’s assets amounting to US$49,205 million.