IT’S a miracle that the economy did not completely shut down in 2014 as political leaders had other pressing matters: fighting for positions.
CHIEF BUSINESS REPORTER
The leaders did not give priority to the economy lending credence to claims by Italian philosopher Niccolo Machiavelli that politics have no relation to morals. The amount of effort and resources deployed to decimate former Vice President Joice Mujuru and her allies would have been enough to steer the economy to double digit growth rates.
NewsDay gives a rundown of some of the highlights of the difficult 2014.
CEOs smile all the way to the bank
There was uproar at the beginning of the year amid revelations CEOs of parastatals and state-owned entities were earning super salaries at a time the entities were failing to offer basic services.
The Premier Service Medical Aid Society (PSMAS)—though it is not a parastatal—stirred the hornet’s nest when it emerged that former CEO Cuthbert Dube’s salary and allowances was over $500 000 when the society was failing to provide services to subscribers.
Government recently said salaries would be reviewed on a case by case basis looking at the performance of the economy.
Mega deals, then what?
In August, President Robert Mugabe and his delegation were in China where, according to state media, nine mega deals were signed. Similarly, a high powered Russian delegation was to visit Zimbabwe in which Moscow said it would pour $3 billion in a platinum venture in Darwendale. As the year came to an end yesterday, nothing has been said of those mega deals.
Send ‘em home
More than 5000 workers were retrenched in 2014 as companies struggled to stay afloat. According to the Confederation for Zimbabwe Industries, the Purchasing Managers Index (PMI) stood at 43,5% this year, signalling that there is no respite to the economic decline. PMI above 50% means the manufacturing sector is growing and expanding. A PMI under 50% means the manufacturing sector is contracting.
The capacity utilisation in the manufacturing sector shed 3,3 percentage points to 36,3%.
New broom, back to basics at RBZ
John Mangudya took over the reins at the Reserve Bank of Zimbabwe (RBZ) smoking the peace pipe. Mangudya went back to the basics saying the economy needed to stimulate production for economic recovery through pursuing consistent, transparent and predictable economic policy measures.
The tone of the statement was conciliatory as he sought broader support from all stakeholders to steer the economic ship out of troubled waters.
Weak banks find the going tough
Tetrad had to obtain a court order to ward off marauding creditors. At a scheme meeting in August, the creditors agreed to waive claims pending the recapitalisation of the bank.
The moratorium was further extended to January 31. RBZ responded by stopping the troubled bank from taking deposits and granting loans until it had finalised its recapitalisation initiative.
Capital Bank surrendered its banking licence after its major shareholder, the National Social Security (NSSA) said it had no money to recapitalise the institution. NSSA later applied for a building society licence.
No Zimdollar return, only bond coins
Two weeks ago, RBZ introduced bonded coins to alleviate the change shortages. Scepticism remains whether the introduction of the coins is not a step to retrieve from the grave the banished Zimbabwean dollar buried when the country adopted dollarisation in 2009.
When Zim charms the Bretton Woods
The International Monetary Fund reopened its Harare office since its closure nearly a decade ago. The Bretton Woods institution approved a successor to the Staff Monitored Programme on Zimbabwe saying the country had met the requirements in the initial supervised economic reform programme. This was a vote of confidence on a country by the IMF, widely considered as the international Commissioner of Oaths.
The World Bank said it would team up with other donors to set up the $100 million Zimbabwe Reconstruction Fund to support the implementation of the country’s five-year economic blueprint.
Depressed consumer demand ushers in deflation
For the first time since the use of the multicurrency regime, Zimbabwe slipped into deflation in February as depressed consumer demand creeps in.
Zimbabwe slipped into deflation in February when year-on-year inflation shed 0,90 percentage points to -0,49% from the January statistics. It slipped out of deflation in July. It was back in deflation in October.
Rising NPLs jolts government into action
The banking sector has seen a rise in default rates since dollarisation with the ratio of non-performing loans (NPLs) peaking to 20,45% as at the end of September from 1,6% in 2009 amid fears that banks would cut on lending critically needed in the economy. The rising NPLs jolted government into action resulting in the creation of the Zimbabwe Asset Management Company designed to buy bad debts in the banking sector.
Finally, a CSD is in place
The Central Securities Depository (CSD) went live with three counters in September after several false starts, a move that would reduce the settlement of transactions on the Zimbabwe Stock Exchange to five from seven days.
CSD is a facility for holding and administering securities, as well as enabling transactions to be processed by means of book entry. It aims to further reduce the settlement of transactions to T+3 (transaction plus three days) by June next year. To date, 43 out of 66 counters have been on-boarded with CSD.
As easy as ABC
In April a company led by ex-Barclays Plc chief executive officer Bob Diamond and entrepreneur billionaire Ashish Thakkar announced that it would buy pan African banking group BancABC as it bids to establish a premier company in Sub Saharan Africa.
The deal was completed in August, a record time considering that the Essar deal consummated in 2011 is still to be implemented!
BancABC founding CEO Douglas Munatsi, chief operating officer Francis Dzanya and chief finance officer Beki agreed to leave the banking group last month after the acquisition by Atlas Mara.