Zimbabwe Business Watch ~ Week 43

Chaos continues to envelop the business community as the accepted practice of conducting day to day affairs becomes increasingly impossible.

Millions of hours of production of the remaining utilised capacity are being lost as every employee is forced to queue for a daily cash withdrawal of ZWD50 000, which is only sufficient to buy 2 loaves of bread.

Employers are now paying their staff in salt, mealie meal, and whatever commodity the worker can then convert to foreign currency – this made available by the millions of exiles working in other countries.

The US dollar was sitting at 4, 5 million to 1 just 7 trading days ago, and has now reached as high as 180 million to 1. This equates to a rise of 4 000%.

The Zim dollar is worthless but business people suffer severe penalties for failing to trade in the national currency although some forex trading licences have been issued, particularly to those politically associated with the government.

Financial accounting is becoming meaningless in these circumstances, with values changing at over 50% a day. From that aspect alone it can be seen that planning of any description is virtually impossible and it exposes the welfare of companies to serious risk when profit margins can be wiped out in the course of a number of hours of inflation.

Reserve Bank of Zimbabwe (RBZ) officials are raiding businesses – sometimes late at night and even on weekends – demanding the owners attend the scene. All forex is confiscated and then paid in Zimbabwe dollars at the bank rate, which amounts to theft because of the massive gap in the exchange rates. Offenders are then charged at the nearest police station under various regulations that have been introduced to squeeze entrepreneurial spirit and survival.

Medical scheme contributions now exceed salary levels for the first time, thereby denying salaried employees private medical care.

This entry was posted by Sokwanele2 on Tuesday, October 21st, 2008 at 3:52 pm. You can follow any comments on this entry through the RSS 2.0 feed. Both comments and pings are currently closed.