The Zimbabwean economy has undoubtedly transformed its complexion for the better over the last few months but the question that remains is whether enough has been done to keep it from sinking deeper into the murky waters as it enters the second half of the year.

The formation of the inclusive Government in February under which all the political parties agreed to give priority to the restoration of economic stability and growth in Zimbabwe completely transformed the political landscape, hence the economy. Political disharmony had long been identified as Zimbabwe’s greatest undoing.

The official adoption of the multiple currency trading system in February (which many loosely refer to as dollarisation) has had a phenomenal effect in terms of resuscitation of business, availability of previously scarce goods and services and bringing back confidence into the economy.

This has brought with it the disappearance of the “dealer economy” and its evils as decent ways of doing business have given a breath of fresh air. But not so to the dealers themselves, many of whom have been left stranded, with nowhere to run.

Inflation, previously Zimbabwe’s most elusive enemy, has been running in the negative territory (deflation) since February, with the month-month figure for May standing at -1 percent.

Last year annual inflation figures had reached 231 million percent. Progress recorded in this instance has largely been attributed to the switch from the Zimbabwe dollar transactions, the availability of goods and services at generally “affordable” prices. Speculative tendencies have disappeared much faster than they came.

Although the introduction of the US dollar, South African rand, British Pound and the Botswana Pula, among other currencies came at a price for many Zimbabweans who had trillions of Zimbabwe dollars in their accounts, the benefits arising there from have outweighed the losses.

Many though, still wish they could get access to their savings in one form or the other.

Prospects of achieving at least a four percent economic growth by year-end as predicted by Finance Minister Tendai Biti now sound achievable although there is so much that still needs to be done to get the economy into the overdrive.

The economy is believed to have grown by 1,8 percent in the first half of the year.

Industrial production has general risen to an average 30 percent from 10 percent although such companies as National Foods boast of much higher figures.

Minister of Economic Planning and Investment Promotion Elton Mangoma last week said employment had over the last few months risen to 15 percent, up from six percent, with more jobs expected to be created as new and expansion programmes gather pace.

Investors from all corners of the globe have begun to warm up to the opportunities that Zimbabwe has to offer, many of which have always beckoned for attention but were previously hidden under the veil of political disharmony.

Interest from South Africa, Botswana, Mozambique, China, South Korea and other such countries have been expressed in the mining sector particularly, tourism, manufacturing, agro-processing and other sectors of the economy.

Many of them could aid a much faster recovery pace if followed through as promised. Such companies as Metallon Gold that had closed shop when the going got tougher last year are now re-opening their gold mines.

The Zimbabwe Stock Exchange, which had last year become notorious for fuelling speculative transactions, has sobered up since reopening. Although it started off at a snail’s pace, the last few weeks have witnessed increased trades with the key industrial index at 154,42 points as of Tuesday while the mining index went up 3,36 points to close at 271,65 points on the same day.

In the first two months of trading which resumed on February 19, shares had gained by more than 120 percent, the biggest advance out of 88 equity markets tracked by international news agency Bloomberg. This performance was spurred by growing confidence in the economy.

Large parcels of shares have exchanged hands in recent weeks, as the bourse becomes one of the best investment options currently.

In his US$1 billion revised budget presented in March, Minister Biti was hopeful that the inclusive Government and the launch of STERP would anchor economic revival.

“The new inclusive Government is committing itself to putting Zimbabwe people and the country first by addressing the above challenges (hyperinflation, production capacity etc), geared towards turning around the economy and hence, afford the people of Zimbabwe better living standards,” said Minister Biti as he unrolled the revised budget before Parliament in March.

The 2009 Monetary Policy Statement issued by Reserve Bank of Zimbabwe Governor Dr Gideon Gono was also upbeat about growth projections with the RBZ chief saying 2009 would mark the turning point of the country’s economic fortunes premised on hard work, honesty and sacrifice.

The Short Term Emergency Recovery Programme was launched by President Mugabe in March. However, after all has been said and done, the funds to drive economic growth at the anticipated pace have largely remained elusive.

STERP says Zimbabwe needs more than US$8 billion to re-jig the economy but so far lines of credit and other forms of funding secured so far amount to about US$1,5 billion.

Companies need funds to recapitalise to achieve their potential while massive investments are expected to allow the mining sector to take off rapidly.

Banks, some of which are facing recapitalisation challenges, have remained constrained in their efforts to lend to business and individuals.

Some promises of financial packages from the region and beyond are still to be followed through, stalling progress in turning the economy around.

The absence of attractive instruments through which companies can raise money has hamstrung efforts by industry to increase production capacity.

Revenue generation, which has improved from US$20 million per month to about US$50 million, has remained far below Government’s financial requirements to meet salaries and to drive the economy.

However, the Zimbabwe Revenue Authority has embarked on more aggressive revenue collection measures which could yield better inflows into treasury.

Analysts are upbeat about prospects for the second half.

Confederation of Zimbabwe Industries, the Zimbabwe National Chamber of Commerce and other economic believe the economy will be in better stead by year-end.

Speaking on the sidelines of an African Development Bank meeting in Dakar, Senegal recently, Minister Biti said the future looked bright.

“We should be able to obtain sustainable growth rates in real terms . Those (investors) who are sitting on the sidelines waiting for politics to completely resolve itself, waiting for what I call the landmine period to blow over, I think they may miss the boat,” he said.

Zimbabweans await to assess progress under the 100-day plan which was set in motion on April 29 and will run until August 6.

Under the plan, Government has set practical measures to implement the Global Political Agreement between Zanu PF and the two MDCs, and STERP.

Its exactly one month and four days before the deadline. The ground the respective ministries and Government arms will have covered by then, remains to be seen.

“The economy is now on the right track. We need to keep working hard to achieve the goals and objectives enunciated in STERP,” quipped one commentator.

(Source)