This interferes with decision-making and stimulates myopia to circumstances and developments which necessitate such decisions. Consequently, the doom and gloom perceptions concerning the future of the business become self-fulfilling prophecies.
The lack of substantive confidence in the survival and enhancement of the economy in general, and that of the business in particular, has been a pronounced characteristic of most of Zimbabwe’s business community for many years. The absence of this confidence has progressively intensified that it has wholly absorbed the minds of a great majority of the Zimbabwean population in general.
The causes are manifold, and for a long time wholly justified the negative perspectives of most in the business world. Many people became increasingly convinced that there could not be, and would not be, any change to the adverse circumstances. The ensuing pessimism has provoked continual disbelief in any of government’s declared intents to address the negative causes of economic depression, with the result that the business community fails to exploit such changes to economic policies.
The negative perceptions on the economy have been caused by many factors and developments, including:
- Rampant hyperinflation that prevailed during 2006 to 2008. Inflation soared upwards exponentially, to unprecedented global levels that exceeded maxi-trillions per cent, virtually unmeasurable by statisticians. As a result, most of the populace became increasingly impoverished consumers whose purchasing power continuously diminished, thereby reducing business revenues, whilst very severely increasing operational costs. Enterprises which had operated successfully for many years became weaker, their asset bases and capital resources continually eroding and becoming insufficient to assure the survival and future viability of operations. Key factors driving business despondency included:
- Pronounced government authoritarianism and bureaucracy, including intense exchange controls, gravely hampering importations, intensifying operational costs, restricting crucial changes in business policies.
- Decline in the productivity of employees, whose attentiveness to effective fulfillment of their duties progressively declined as the economic pressures impacting upon them overrode their focus on jobs, duties and obligations. This circumstance was further compounded by many employees peremptorily terminating service to seek greener pastures.
- Intense deterioration in the provision of service by state utilities, parastatals and local authorities. This included diminished and erratic availability of energy, water supplies, services such as refuse removal, and deterioration of infrastructure such as roads.
- Aggressive, domineering, actions by government ministries and agencies related to business operations, including the imposition of direct and indirect taxation, and compliance therewith.
- General inability to source funding to replace lost working capital, with that available being at prohibitive costs, and usually available for very limited duration.
- Aggressive, irrational, and destructive pursuit of government policies of indigenisation and economic empowerment, resulting in well-founded fears of losses of business ownership and control, concurrently with absence of any just and fair compensation for the enforced divestment of business ownerships.
- Endless friction and conflict within the political environment, creating ever-increasing private sector conviction of intensifying political instability and concommitant national unrest, with allied economic instability.
- Fears of intensifying crime including corruption, theft, asset-misappropriation, as more and more of the population became increasingly impoverished.
- Markedly deteriorating labour relations as economic ills and hardships intensified the demands of employees, where they had total disregard for the inability of employers to meet such demands while retaining operational viability.
These are but a few of many factors which have occasioned the despondency, depression and pessimism of most of the business community to such an extent that it has, with a few exceptions, been unable to recognise any positive developments ameliorating the extent of the ills, and creating barriers to recognition of opportunities to strengthen and enhance business.
But the reality is that, notwithstanding that Zimbabwe is still plagued by many ills including continuing political instability and friction, many of such ills have considerably diminished. Of the positive changes (which are not receiving due recognition) is the total cessation of hyperinflation, with Zimbabwe’s inflation levels now being considerably lower than prevailing almost anywhere else in Africa, and very considerable relaxations in exchange controls.
Little or no recognition is given to such positive developments, focus being narrow-mindedly concentrated upon those ills that still exist. Therefore, business confidence continues to wane, thereby constraining the pace of economic recovery. All bad news is taken as fact, even if not verified, whilst any good news is cavalierly dismissed as being devoid of foundation and substance.
By Erich Bloch