HARARE – Despite the introduction of the Zimbabwean Gold (ZiG) currency just over four months ago, listed companies in Zimbabwe have voiced concerns about ongoing economic difficulties, including persistent foreign currency shortages, unreliable power supply, and infrastructural issues.
Prominent firms such as Amalgamated Regional Trading (ART), OK Zimbabwe, and Nampak have reported that these challenges continue to impact their operations significantly. ART has underscored that foreign currency instability remains a major hurdle, with unreliable power supply compounding operational difficulties.
“The operating environment has been fraught with challenges, notably foreign currency instability and unreliable power supply,” ART stated in a recent update.
OK Zimbabwe has also flagged the ongoing issue of foreign currency shortages within the formal banking sector. This scarcity has led some stakeholders to demand payments in US dollars for products and services, exacerbating pressure on the exchange rate.
“The shortage of foreign currency in the formal banking sector has continued to strain the exchange rate,” the retailer noted.
Nampak has reported its own set of challenges, including the adverse effects of an El Niño-induced drought on the agricultural season. This has intensified economic strains, coupled with power shortages at its Ruwa plant, which have led to increased reliance on generators. Despite these hurdles, Nampak managed to increase overall volumes by 2 percent in the third quarter compared to the previous year, though it acknowledged that “the economic environment continues to show signs of strain.”
CAFCA, a leading cable manufacturer, warned that infrastructure development is being hampered by the drought, falling commodity prices, and inadequate power generation. The company cautioned that these factors will continue to affect infrastructure development in the coming period.
Nevertheless, there are signs of improvement attributed to the ZiG currency. CAFCA reported a more stable trading environment in the third quarter, crediting the ZiG and the increased transactional use of the US dollar for this stability.
Hippo Valley, a major sugar producer, highlighted the positive impact of the 2024 monetary policy framework on controlling inflation. The company noted that the quarter was marked by positive changes, including initial exchange rate stability provided by the ZiG.
ART recognized that, despite ongoing challenges, the ZiG currency has introduced a measure of stability, leading to greater acceptance and use of the local currency.
OK Zimbabwe also provided a more optimistic assessment, noting that the introduction of the ZiG contributed to a significant reduction in month-on-month inflation, from 57.48 percent in April 2024 to 0.0 percent by June 30, 2024.
Similarly, Willdale, a major construction materials supplier, observed that inflation stabilized in the quarter, with month-on-month rates staying below 1 percent, reflecting growing confidence in the ZiG.
While challenges remain, the general consensus among companies is that the ZiG has brought a degree of stability to Zimbabwe’s economy. Firms are calling on authorities to sustain this stability to foster a more positive economic outlook moving forward.
Source: Business Weekly