Zimbabwe Business Watch : Week 21
The economy staggers as it tries to grow but does not have the financial means to do so.
Many companies are beginning to witness the surge in demand for goods but are having to turn away orders as there are insufficient raw materials. When approached for credit, banks turn away their customers as the forex is not available in the quantity to required to kick start local manufacture. Ultimately, the retailer and wholesaler are forced to import chocolates from Argentina, yoghurt from South Africa, and clothes from the Far East. This slows recovery, fails to improve employment levels, and denies the central revenue collection authority the taxes that they so desperately need to fund state services.
The week under review saw little activity on the stock exchange due to the severe shortage of foreign currency. The banking sector continues in crisis mode and the Reserve Bank cannot provide one of its primary roles as a supplier of money as it has no authorised capacity to print US dollars or Rand. This means the retail sector continues trying to cope with cash shortages.
May 20th, 2009 20:19
This describes a situation very like that of Britain in the late 1940s, when the country was broke after WWII. If people work hard, it will slowly improve.
The worst thing to do would be to print more Zim dollars.
Import businesses pay taxes, as well as local manufacturing businesses.
May 21st, 2009 05:54
Having destroyed the “oppressive colonial” economy and industrial infrastructure that took a hundred years of sweat, dedication and innovation to build, Zimbabweans now find themselves pretty much back at the same point as the early white settlers faced in 1890 – no money, no industry, no public services, little commercial infrastructure, and a total reliance on expensive imported goods.
Now Zimbabweans must retrace their past economic journey all over again – start small, work hard on the land or in the mines, innovate, save, lead simple lives, and forgoe all the expensive services and luxury goods that we once took for granted.
With luck, hard work and a better choice of leadership, after a couple more generations Zimbabweans may once again reach the standard of living which they once took so much for granted.
May 21st, 2009 09:01
To kick-start an economy we need to do two things:
1/ Encourage the producers.
2/ Eliminate the parasites.
May 22nd, 2009 04:48
It should hardly come as a surprise that there is not enough forex in Zim. A basic understanding of economics will tell you that forex is what you get when you export goods or bring in tourist dollars. And neither of those activities happen by themselves – they require productive work. No productive work = no forex.
I think most Zimbabweans have forgotten what productive work is – sitting in parliament or a government office or selling bananas on the street is not productive work.
Productive work means helping to till the soil for export crops; productive work means going down a mine or sweating in a factory from 8-5; it means providing waterholes and sanctuaries for wild-life and welcoming tourists at the border; it means building up the beef and dairy herds, and shipping flowers to Europe.
Unless Zimbabwe as a nation rediscovers its old productive work ethos, we condemn ourselves to a subsistence future, whinging and squabbling over charity handouts and grubbing for scraps from the tables of politicians and expatriates.
May 22nd, 2009 06:51
Those government leaders who have recently tasted the good life (MDC), or have revelled in it for years (Zanu-PF), are indicating that they find it more palatable to plead for the world to come to the party rather than take on board the type of wisdom offered in the three posts above. But amongst ordinary people there is a thread of exhortation for self-help, and some of the clean-up of community break-down, filth and pollution has been people-driven, which is encouraging.
May 22nd, 2009 10:58
@Graham (the original) –
With the oppressive colonial government gone we fell into the hands of oppressive dictatorship which was not as bad in some aspects but worse in others. With the experience we have gained (first hand) we should be politically mature now. The knowledge we have on what constitutes a bad government has come at a price and twice for that matter.
Our next government (without Mugabe) will certainly not be perfect even the USA is currently plagued by a series of scandals. Fingers are pointing at Bush for the 9/11 attacks on the W.T.Centre reports are streaming in that there bombs planted on the pillars of the towers(notice how the buildings “safely crumbled into one heap barely affecting neighbouring buildings just the way old building are demolished). There is a lot more corrupt stuff happening over there but what is important for us is to develop as much controls on the three pillars of governance as we can possible conceive. This development of controls ought to be ongoing.
I know that whatever economic reforms we make if our governing policies have loop holes that allow the executive to buy Bentleys/personal castles overseas (using state funds) then gag the mouth of the judiciary while arm twisting the legislature then……
May 22nd, 2009 12:52
Well said! Graham (the original).