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Harare – Despite launching the Zimbabwe Gold (ZiG) currency just over four months ago, Zimbabwe’s listed companies have expressed concerns over ongoing economic difficulties, including persistent foreign exchange shortages, unreliable electricity supply and infrastructure problems.
Prominent companies such as Amalgamated Regional Trading (ART), OK Zimbabwe and Nampak said these challenges continued to have a significant impact on their operations. ART stressed that foreign exchange instability remained a major obstacle, with erratic power supply exacerbating operational difficulties.
“The operating environment is challenging, particularly with foreign exchange instability and unreliable electricity supply,” ART said in a recent update.
OK Zimbabwe also noted that the formal banking sector has been experiencing a shortage of foreign exchange. This shortage has led some stakeholders to demand payment for products and services in US dollars, which has exacerbated exchange rate pressures.
“The shortage of foreign currency in the formal banking sector continues to lead to tight exchange rates,” the retailer noted.
Nampak also faced a number of challenges, including the adverse impact of the El Nino-induced drought on the agricultural season. This added to the economic pressure, coupled with power shortages at the Ruwa plant, which led to an increased reliance on generators. Despite these obstacles, Nampak still managed to increase total production in the third quarter by 2% compared to the same period last year, although the company admitted that “the economic environment continues to show signs of strain.”
Leading cable manufacturer CAFCA has warned that drought, falling commodity prices and insufficient power generation have hampered infrastructure development. The company warned that these factors will continue to affect infrastructure development for some time to come.
Still, there are signs of improvement for the ZiG currency. CAFCA reported a more stable trading environment in the third quarter, attributing the stability to an increase in the use of ZiG and U.S. dollar transactions.
Major sugar producer Hippo Valley highlighted the positive impact of the 2024 monetary policy framework on controlling inflation. The company noted that there had been positive developments during the quarter, including preliminary exchange rate stabilization provided by ZiG.
ART recognises that despite ongoing challenges, the ZiG currency still has a level of stability that has led to wider acceptance and use.
OK Zimbabwe also gave a more optimistic assessment, noting that the introduction of ZiG would help to significantly reduce the monthly inflation rate from 57.48% in April 2024 to 0.0% by June 30, 2024.
Similarly, Willdale, a major building materials supplier, observed that inflation stabilized during the quarter, with month-on-month inflation remaining below 1%, reflecting growing confidence in ZiG.
While challenges remain, businesses generally agree that the Great Recession has brought a degree of stability to the Zimbabwean economy and they are calling on the authorities to maintain this stability to promote a more positive economic outlook in the future.
Source: Business Week
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