A leading business official has said Zimbabwe’s struggling industry looks set to recover after the central bank eased exchange controls to let exporters retain the bulk of their earnings in bank accounts.
”Give it another 12 months and we will be back on our feet. I am positive about that,” Callisto Jokonya, president of the main Confederation of Zimbabwe Industries, told Reuters.
In a rare note of private sector optimism, Jokonya said the future now looked brighter for Zimbabwe industries.
Earlier this week Reserve Bank Governor Gideon Gono said local exporters could now keep 70% of their receipts in corporate foreign currency accounts while selling the remainder to the central bank at the official rate.
Gono also devalued the local dollar by 60% against the greenback, offering further relief to industries previously obliged to use 70% of their forex in 30 days, or change it into Zimbabwe dollars at a rate seen as unviable.
A chronic shortage of foreign exchange during a deepening recession over the last seven years had also forced firms to source currency for crucial imported raw materials at exorbitant prices on a thriving black market.
”The biggest ill we had in the economy was the imbalance in the price of our dollar versus foreign currency … and I think that has now been addressed,” said Jokonya, who has been pessimistic in the past about the country’s economic prospects.
”What the government and Reserve Bank have done is make the operating environment better for industry and I go away more optimistic than I came,” Jokonya told Reuters at the close of an annual business conference two days after the currency reforms.
Zimbabwe’s foreign currency crunch has been one of the most visible signs of a crisis widely blamed on the policies of President Robert Mugabe’s government.
It has been worsened by the withdrawal of key foreign aid over policy differences with Harare, including the seizure of white-owned commercial farms for majority blacks.
”From the government point of view they have done their part. For once I would like to put the onus on the private sector to go out and manufacture and export,” Jokonya said in Zimbabwe’s southern city of Bulawayo late on Thursday.
”Nothing will happen unless they take action and get their hands dirty. Industry at the moment is operating below capacity, almost about 30%. The key thing is that we increase our capacity to over 60, 70%.”
Economy still vulnerable
But business leaders at the conference said companies remained vulnerable to Zimbabwe’s inflation rate — the world’s highest at 1 193% — along with fuel shortages and frequent electricity and water cuts.
On Thursday a leading power expert urged the government to remove tariff constraints on the state power utility so it could raise revenue to boost domestic electricity generation, key to industry’s operations.
Unemployment in the Southern African state has soared to over 70% as companies either fold, or are forced to downsize. The economy has shrunk by more than a third in the past eight years.
Mugabe, in power since independence from Britain in 1980, denies responsibility for the country’s economic woes, and in turn accuses his foreign and local opponents of sabotaging Zimbabwe’s wealth over his controversial policies. – Reuters