Expectations by the Reserve Bank of Zimbabwe (RBZ) that the country’s solid performances in the agricultural and mining sectors in 2018 will result in spillover effects into other sub-sectors, such as manufacturing and distribution, are unlikely to materialise. This comes in the wake of an ongoing currency crisis that could see manufacturing come to a complete halt, with raw material stocks said to be running extremely low. NKC African Economics economist and Zimbabwe specialist, Jee-A van der Linde, said manufacturing in the country was under huge pressure. “There are persistent fuel and electricity shortages, constant mechanical breakdowns, and a lack of forex that is needed to import critical raw materials and new equipment,” he said. At the time of going to press shipping companies were threatening to block the release of containers for Zimbabwean importers as fees of millions of US dollars remained unpaid. “The economy is beset by extreme liquidity constraints, which require the government to settle investor concerns and stimulate the economy by implementing supportive facilities. In other words, due to the shortage of foreign currency, we tend to see the government place greater emphasis on those industries that generate foreign exchange,” said Van der Linde. Duncan Bonnett, an analyst at Africa House, said it was very difficult to make any predictions regarding Zimbabwe. “It all depends on the government’s ability to resolve the liquidity crisis and reassure foreign investors that their investments are safe,” he said. “The catastrophic economic conditions and major financial challenges have constrained the government’s ability to move forward,” said Bonnett. Whilst the Zimbabwean government has pushed to expand the country’s industrial growth in recent months, evident in the deals signed with several mining companies which are all strategically aimed at developing new infrastructure, it will now be focused on settling investor concerns as it attempts to stabilise the prevailing situation.
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It all depends on the government’s ability to resolve the liquidity crisis and reassure foreign investors that their investments are safe. – Duncan Bonnett
