(TALKZIMBABWE) Zimbabwe's economy picking up

Zimbabwe's economy picking up
Moneyweb/TZG
Tue, 05 May 2009 08:57:00 +0000

BUSINESS and the economy at large in Zimbabwe is beginning to pick up - as evidenced by improved availability of goods and commodities on shop shelves and the firming in value of foreign currency in the country, according to reports from Harare.

The government says local currency, having been suspended for at least a year, will not be used any time soon until industrial capacity utilization reaches 60%. At the moment, latest statistics show, industrial capacity and utilization has climbed to 20 percent from 15 percent since the formation of the inclusive Government.

Zimbabwe's economy has slowly come to life after President Robert Mugabe and Prime Minister Morgan Tsvangirai of the Movement for Democratic Change formed an inclusive government. Industry experts express their optimism that the economy and business are showing improvements.

"While people were skeptical of the unity government, things do appear to be falling into shape and confidence in the economic sector of the country is beginning to pick up," said Jeffrey Kasirori, an economic and research analyst with a local bank.

Where shop shelves were virtually empty last year, stock levels have significantly improved.

"You will notice that all supermarkets are fully stocked at the moment as a result of the lifting of pricing and other controls by the government," said a spokesperson at the Zimbabwe Retailers Association (ZRA).

Zimbabwe's Consumer Price Index showed inflation at 94, 6% compared to last year whilst prices dropped over 3% in the last month. The South African Rand
and the United States Dollar have firmed up in value and competition amongst businesses is driving the downward trend in prices of goods and commodities.

This month, the country's Central Statistics Company (CSO) said Zimbabwe's monthly inflation (the consumer price index) fell to minus 3.1 percent in February after the government allowed the use of multiple currencies.

Economic commentators in Zimbabwe say the best is yet to come as the country has the potential to overtake several countries in the Southern African region as a leading economy.

But this, they say, will not happen any time soon and until aid in financial assistance flows Zimbabwe's way.

Improvements in Zimbabwe are also spilling off to South Africa.

Both the country's Industrial and Mining indices rose by healthy margins although Stock Exchange trading volumes are still small and investor confidence remains low.

International investors are waiting by the sidelines to enter into Zimbabwe. The latest being MTN which, as reported by South African media yesterday is mulling plans to enter into Zimbabwe.

South Africa's African Rainbow Minerals is also sizing up its options for entry into Zimbabwe; hence the Patrice Motsepe headed minerals firm has registered a company in Zimbabwe.

The mining sector has over the past couple of weeks witnessed some good developments as several mines that had shut down resumed operations.

Businesses continue to be constrained by the lack of cash and funding from financial institutions whilst fierce competition reduces profit margins.

The International Monetary Fund (IMF's) Africa Department Director, Antoinette Sayeh highlighted that recent actions taken by the inclusive Government were 'encouraging'.

She said in a statement: "It's the context in which we think there is a window of opportunity in Zimbabwe that is worthy of support by the international community."

The regional Southern African Development Community (Sadc) has promised to help neighbor Zimbabwe raise $US2bn required to bring back the economy on
its feet trade partners SA and Botswana pledging credit lines and budget support of $800m and $70m respectively.

The funding to date, which includes $200m from Sadc and another $200m from the Common Market for Eastern and Southern Africa, is intended to meet
urgent working capital requirements for local companies, but is a drop in the ocean of need.

Finance Minister Tendai Biti, who has previously clashed with central bank governor Gideon Gono over economic policies, has predicted inflation will fall to 10% by the end of 2009.

-Moneyweb/TZG