More signs of Zimbabwe's economic recovery

Oct 18, 2010

News from and about Zimbabwe is overwhelmingly about the country's messy politics. Resolving the politics would positively affect everything else of course, but that is not to say the economy is not beginning to move forward even with the with the long-running political impasse still continuing.

Despite the fascination with the politics, every week more news of the economic recovery underway is beginning to come out.

An example: 

"Following the stabilisation of the economy in Zimbabwe after the effective adoption of the US dollar as its currency, we have included our share of Zimbabwe's volumes and results for the first half of this year," Britain-based brewer SABMiller said in a statement.
...lager sales fizzed 11 percent higher in Africa, boosted by Zimbabwe unit Delta Corporation. SABMiller, which owns 36 percent of Delta, stopped including the division in its official results four years ago amid chronic foreign currency shortages and economic chaos.
Zimbabwe's economy was hit hard by hyperinflation during a decade-long freefall which impoverished the country. But prices have stabilised since the nation's government abandoned the worthless local currency last year.

Zimbabwe's economy has shown signs of recovery since the formation of a power-sharing government last year by President Robert Mugabe and long-time rival Morgan Tsvangirai. The economy grew by 4.7 percent last year, ending 12 years of contraction.
It is possible to nitpick this story and ask whether increased beer consumption is a positive or not. You could even speculate that more people are drowning their sorrows at the still difficult times than are celebrating normalization and recovery. But taken together with any other tidbits of news from across the economy there is little doubt that this is one of many signs that things are slowly creeping back to normal. This is significant in a country in which for close to ten years about the only thing most businesses and consumers could be sure of was that tomorrow would be worse, more difficult than today. 

Another October 18 story from a different sector of the economy:

Retail is on the rise in Zimbabwe

After years of neglect, Edgars’ Zimbabwean stores are finally getting much-needed investment.

Business is still precarious. Edgars posted a loss of 658 400 in the six months to July, but this was an improvement on the 1,5m loss a year earlier. SA- based parent Edcon, which owns 40% of the Zimbabwean operation, has not received a dividend since 2000.

Overall, however, Ms Masterson is pleased. “It’s huge fun right now,” she says. “It’s fabulous. After the business declining for so many years, it’s fantastic to see it on the increase.”

The situation is a far cry from three years ago, when images of Zimbabwe’s empty shelves and stores were beamed around the world. Replacing Zimbabwe’s beleaguered currency with the dollar last year ended the hyperinflation that left stores unable to buy stock because the cash they received devalued so quickly it was insufficient. 

What is happening in clothing retail is also happening in food. In Harare’s affluent suburbs, the shelves of grocery stores are full. Produce is plentiful and the range is wide — perhaps even too wide at times. 

So as the politicians continue to fight over the turf, unlike before, they are doing so in a way that for the most part allows business to stabilize and plan for the future, basics which were impossible during the time of hyperinflation and shortages.

Elsewhere there are debates about whether Zimbabwe will be able to attract investment or not. Potential new players unfamiliar with the country may continue to be jittery about the uncertain politics, but in a way the 'will they or won't they' debate is moot, as shown by the increased confidence and investment of firms like SAB Miller/Delta and Edgars with a long history in the country. They would be far more knowledgeable about risk than distant prospective investors, and have far more to lose than them. It is a significant vote of confidence in the country's future that for the first time in many years they see recovery, and that they do not believe it to be threatened by the continuing political heckling.



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