ZIMBABWE’S policies remain ‘incoherent and confusing’ post-election period, a situation that is affecting business performance and economic growth, businessdigest was told this week.
The southern African country held polls in August this year, whose presidential result was rejected by the main opposition political party, Citizens Coalition for Change (CCC). President Emmerson Mnangagwa won the election by 52,6%, against CCC leader Nelson Chamisa's 44%.
In separate interviews this week, economic and financial analysts said the government should pronounce bold policies for infrastructural and macroeconomic development.
“Currently, policy is both incoherent and confusing,” economist Tony Hawkins said.
“As the weeks go by, the government makes increased use of the USD (United States dollar) while claiming it is encouraging greater use of the ZWL (Zimbabwe dollar), with the latest example being this month's failed attempt to sell USD Treasury bills.
“The current attempts to stabilise the ZWL are not working. It is obvious that the government has run out of ideas and gimmicks like gold-backed tokens,” he added.
Hawkins also said policies should be made known and explained to people so that they are aware of what they stand for and how they should be implemented
Statutory Instrument 118A of 2022 allows the use of foreign currency until the end of 2025. But Mnangagwa has, on several occasions, threatened to place it out of circulation before 2025. Research firm Fincent Securities also said there was a real chance the United States dollar would be withdrawn from the market even before the 2025 sunset period.
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However, it warned of negative consequences to formal businesses if that happens.
The US dollar currently dominates transactions, with 80% of transactions taking place in the greenback.
Nedbank Group chief executive officer Mike Brown, who visited the country recently, called for certainty around the usage of the US dollar to allow businesses to make long-term decisions as 2025 draws closer.
This comes as it emerged that banks are no longer offering long-term loans to businesses, with others expressing scepticism on what the future holds beyond 2025.
“Banks and any business require certainty in the regulatory environment to be able to make long-term decisions,” Brown said.
ZB Transfer Secretaries managing director Robert Mutakwa said: “For every business to unlock doors and for investment to happen, favourable policies should be put into place. That engagement should be done between the government and the investors.”
He also lamented how these policies were affecting the economy by creating problems, including unemployment.
“The different policies in the urban areas are affecting the use of private money and development and it also affects the employment industry,” Mutakwa said.
“The reformation of policies post-election can enhance the growth and development of the economy. The government, local authorities and real estate sector have to engage in a dialogue to collaborate and work together rather than working independently.
“As you see now, there is a gap that has been created between the local authorities and the real estate investors and it's affecting the rate in which development has to flow.”
Currently, real estate is becoming a global investment and many investors have shown interest in it. It is also expanding even to other parts where development was lacking
In Zimbabwe, real estate has seen a boom as investors have seen an opportunity in investing on spacious virgin lands and utilising the already colonial developed land, turning them into a life time investment.
With favourable policies and well managed resources, the country has strong foundations for accelerating future economic growth and improving standards of living, according to experts.
As of Tuesday this week, the local currency traded at ZW$5 693, 8 against USD. The International Monetary Fund predicted that annual inflation would hit 396,2% and 190,2% by year-end and in 2024, respectively.
Zimbabwe’s annual inflation was 18,4% in September after authorities adopted a geometric aggregation method to analyse the consumer price index. Central bank monetary policy committee member Persistence Gwanyanya said: “We need stability that will attract capital in infrastructure development and what we need today is capital and the suitable capital will be a long-term capital, but in an environment of instability it is very difficult to attract that one.
“So, as monetary authorities, I think we need to work very hard to ensure that we promote stability by continually fostering stability. You know we are excluded from the external world so we can’t access capital, which makes the re-engagement narrative quite key. We need to continuously see how we can improve our relationship with the external world”.
About dropping the greenback, Gwanyanya said the government has advised the market that they would come up with a position on the multi-currency system.
“It’s up to the authorities to come up with policies. There is no absolute need for panic, as it is not an issue. We expect the minister (Finance minister Mthuli Ncube) to issue a statement soon and that should not worry business,” he said.
“The same way the market requested the government to put a timeframe and they listened, is the same way the government will listen again. It’s going to be sorted out and the position will be given very soon. We don’t expect things to happen on one goal and the policy makers are going to respond to the market goals.”