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.