Zimbabwe – trust returning slowly

Zimbabwe is clawing its way back from the brink of economic collapse thanks to a combination of the resilience of its people, its business infrastructure, and natural wealth. It takes a special type of business person to keep trading and operating with no reserves, erratic cash flow, and the spectre of civil strife hanging over daily life. Those who made it through are now working hard at rebuilding the economy and their companies. Many of the manufacturers that were forced to close are now producing again, albeit at around 20% of capacity. Agricultural exports have collapsed – with the exception of cotton that has traditionally been grown by small-scale farmers and a slowly recovering tobacco crop. But, Chinese extension officers are helping the new land occupiers to start producing again. They are also trying to sell Chinese-made agricultural machinery into Zimbabwe, but as one lamented to FTW, there is no money to buy it. A shortage of capital is probably the biggest challenge facing anyone wanting to do business with Zimbabwe. At present, there is a market for just about anything as the country rebuilds itself with imported machinery, parts and even groceries. Hyper-inflation, and then the overnight switch from the Zim dollar to the US dollar and rand emptied bank accounts and destroyed trust in the banking system. The trust is returning slowly, and the banks are building up reserves so they can start lending again. Stores are well stocked, but virtually everything is imported – a far cry from the days when the country was a net exporter of food. Freight companies that specialised in handling meat and vegetables have had to find new products to move. As a result, there is intense competition in the freight and logistics industries – which makes it easy to move goods, commodities and products in and out of the country. Companies that find ways of helping their Zimbabwean clients cope with their cash flow challenges will be the first to benefit from the opportunities created by the rebuilding of the country's economy. It is not without risks. Imports of mining equipment and spares, for example, were hard hit by the government's proposal to force 51% ownership of all companies operating in Zimbabwe. Few investors are willing to take the risk. There has also been a direct effect on the logistics industry, with plans for new warehouses and equipment being put on hold pending a final decision by the politicians. Another risk is that the politicians may reintroduce a local currency too quickly – sparking another bout of hyper-inflation. Zimbabwean business is fully aware of the risks, but is optimistic that this time the politicians will listen, having seen just how badly their policies and decisions affect the daily lives of Zimbabweans – who have tasted the power of their vote.