New Zimbabwe.com

Zimbabwe faces 2019 starved of investment inflows and foreign currency

By Business Report


HARARE: Zimbabweans have transitioned into 2019 on the back of mounting economic woes and growing demands by industry for the adoption of the US dollar amid a renewed push by the opposition for President Emmerson Mnangagwa to dialogue with MDC Alliance leader, Nelson Chamisa.

Consumers and corporates in Zimbabwe have had to do with price increases and other companies moving into price products in dollars. The central bank had to intervene and pledge to avail forex to avert Anheuser-Busch InBev’s associate in Zimbabwe, Delta Corporation, selling its products in dollars.

Delta Corporation said in a joint statement with the Reserve Bank of Zimbabwe last week that the central bank “will endeavour to provide the foreign currency required to ensure that Delta continues to trade” under the current situation.

The government allocates foreign currency to companies to import raw materials as it insists that the bond note quasi-currency in circulation in Zimbabwe is equal in value to the dollar, despite a parallel market valuation premium of up to 250percent.

“Other companies would have followed Delta and the danger is that civil servants do not have access to forex. That’s why the government had to intervene, but this is just a short-term reprieve as all companies are struggling for forex,” said economist Moses Moyo.

The government has also been grappling with a month-long strike by doctors, who are demanding better working conditions, while teachers and nurses have also given notice of a strike.

This is seen negatively weighing on confidence in the Zimbabwean economy, which is starved of investment inflows and foreign currency.

Zimbabwe is expecting economic growth of 3.1percent this year, but experts and opposition lawmakers and leaders say this may not be possible.

Tendai Biti, the former finance minister and an ally of Chamisa in the MDC Alliance, said on Friday that the administration of Mnangagwa has failed to turn around the economy and has called for dialogue between the two biggest political leaders in the country.

Mnangagwa’s government has been criticised for lavish spending on ministers while Zimbabweans suffer through increased taxes under austerity measures aimed at raising funds for the state.