Zimbabwe Business Watch : Week 24
The financial stalemate continues as the Transitional Government battles to balance accountability and credibility with the urgent needs of the economy – an issue where there is no compromise.
Retail sales continue to grow, especially the food sector, but this is at the expense of manufacturing which cannot access capital to pay for raw materials and other strategic inputs.
Workers are now demanding wages that exceed the regional average placing further strain on those that export or compete against other countries in supplying the Zimbabwe market. Unions argue that excessive utility bills are forcing them to raise their log of claims above what might be expected.
Because the bank notes that fuel the cash transaction driven market place are provided by economic exiles, the wear and tear on them is excessively high and now banks are beginning to refuse notes that do not meet their minimum condition standards. Needless to say the Treasury has no authority to print new Rand or USD and this compounds the problem.
Foreign Governments who have committed to a rescue package, continue to remind the Zimbabwe Government that there must be genuine reforms through the legislature and a distinct return to the rule of law before help is sent. The Stock Market is characterised by low activity and local interest rates are beginning to climb well above the currency host countries, further strangling recovery as USD inflation lurks around the corner.
