Emmerson Njanjamangezi, Group Features Editor 
FOLLOWING a taxing first half of 2023, marked by high currency volatility and brutal power cuts, business is cautiously optimistic that the second half of the year will be much better.
In this regard, captains of commerce and industry who spoke to The Financial Gazette this week implored authorities to fortify their current policies, to further boost the country’s recovering economy.
The chief executive of the Zimbabwe National Chamber of Commerce (ZNCC), Chris Mugaga, described the first half of the year as “a tumultuous period” marked by both “zenith and nadir” points.
Christopher Mugaga, the ZNCC chief executive officer.
“On the zenith side, the country’s trade account performed well in the first half of the year. Similarly, infrastructure spending was very commendable.
“We saw, for example, roads, bridges and dams being constructed, as well as the conclusion of the Robert Gabriel Mugabe International Airport.
“However, our concern here is that the infrastructure boom may also affect the mortgage value, because the prices of properties will likely go down in the long run,” Mugaga said.
“On the nadir side, industry lost significant time due to power outages in the first half of the year. In general, business lost about 25 percent of the day, which was a new low for the country. “Industry had to thus, resort to generators and this was very costly because fuel was expensive during the period under review.
“The currency conundrum was another issue which caused distortions in the market. It really dragged us down during this period. Corporates suffered immeasurable exchange losses,” Mugaga added.
“The issue of blended inflation also exacerbated planning problems for corporates, and this heavily affected industry. Moreover, the exchange volatility piled pressure on non-consumer-facing businesses, which meant that they could not raise hard currency on the open market. The exchange volatilities ate into their balance sheets,” he said further.
Looking ahead, Mugaga said there was a need to “consolidate” the stability that was beginning to be witnessed in the economy.
“We have seen a bit of stability in the market following the interventions by the government in the last two months. However, we are concerned that this stability is coming on the back of a man-made liquidity crunch.
“A lot of government contractors haven’t been paid. We hope that when the government finally pays them off, this will not destabilise the market,” the ZNCC boss observed.
He also feared that the forthcoming harmonised elections could disturb the current economic recovery if they did not proceed smoothly.
“The election cycle is a major threat to the stability we have. However, we have it in our power to make sure that they won’t destabilise the market. We hope that the elections will be peaceful and not affect investor and consumer sentiments. In addition to that, we need to continue to manage the exchange rate, money supply and inflationary pressures,” Mugaga said.
Economic analyst, Victor Bhoroma, echoed Mugaga’s sentiments, noting that it had not all been bad news in the first half of the year.
“Record production of wheat and tobacco, for example, are notable success stories from this period.
“However, the return to hyper-inflation then showed that the country remains burdened by structural and governance challenges with regard to monetary policy. The policy environment is still shrouded by over-regulation and the promulgation of hundreds of statutory instruments that complicate the doing business environment,” he said.
Tony Hawkins, economist
Bhoroma added that “the continued engagement of the central bank in quasi-fiscal operations” had also blighted the first half of the year.
“The period also saw the auction system lose its relevance, to the point that it became necessary to close it and allow commercial banks to be match-makers on the foreign exchange market. To correct the monetary ills that we have in the country, the central bank needs to concentrate on its core mandate of managing inflation and cease all quasi-fiscal operations that lead to printing of money and artificial demand for foreign currency.
“Lastly, there needs to be discipline on government consumption to ensure that its expenditure falls below taxable revenue, so as to limit the need to parallel fund this through the central bank,” Bhoroma also said.
Another economist, Tony Hawkins, said the first half of the year had started poorly partly due to reduced gold production in the first quarter.
Although the situation had since improved, the “official claim of six percent growth” this year was “an election promise fantasy”, he added.
“The outlook has since deteriorated, mostly because of global slowdown, weaker metal prices, the collapse of the local currency, the return to hyper-inflation in June, and the artificial efforts to prop up the exchange rate — while continuing to pump money into the economy via government spending funded by borrowing.
“Government denies this despite RBZ figures showing an 800 percent increase ($600 billion) in public sector borrowing from the RBZ in the year to April. This is 18 percent of the national budget for 2023.
“The second half of the year is also being adversely affected by pre-planting concerns of a severe El Nino drought in 2023/24 according to international forecasts.
“The recent move by the Zambezi River Authority to reduce Kariba Dam allocations because of actual and forecast water inflows in the next six to nine months is a warning indicator,” Hawkins said.
Yet another economist, Eddie Cross, said the first half of the year had been “relatively good” in the big scheme of things.
“I saw the GDP figures produced by the central statistics office the other day at 6,2 percent growth in the first half, and I think that is conservative.
“I think the economy is actually growing very fast. Certain exports are maintaining their expansionary trajectory above 20 or 30 percent per annum, and this is underpinning the growth of the economy.
Eddie Cross Cross is a former member of Parliament and a member of the RBZ’s Monetary Policy Committee.
“I don’t think that agriculture has done particularly well, although it maintained some progress. I think the big problem with inflation was mainly due to money printing by the Reserve Bank of Zimbabwe, and that has now been stopped,” Cross said.
With the measures that had been taken by the government in the past two months, he observed that the local currency had witnessed a 40 percent rebound.
“I think the local unit will continue to strengthen. In fact, my main concern is that the local currency will become too expensive. I think that we have to start thinking about putting a floor in the market and start to buy surplus exchange off the market.
“It is quite clear that there is adequate foreign exchange in the market to meet our needs, and this suggests that the strengthening of the Zim dollar will go on for some time,” Cross added.
The former RBZ monetary policy committee member also said there would be a substantial reduction in inflation figures by September this year.
“The impact of inflation will be slow in coming through, but it is really manifesting itself in the market place and I think that by August or September we will start seeing a substantial reduction in inflation levels,” Cross also said.
