In its 2021 Global Economic Prospects report released early January, the World Bank estimated the sub-Saharan Africa region’s economy to have contracted by 4.3% in 2020.
For already struggling countries like Zimbabwe, which – despite the impact of Covid-19 – could not access any external funding or bailout, worse was expected.
The World Bank estimated Zimbabwe’s GDP to fall by 10% in 2020, after it fell by 8.1% in 2019.
But numbers coming from Zimbabwe are proving otherwise.
According to a survey conducted by the Confederation of Zimbabwe Industries (CZI), Zimbabwe’s biggest manufacturer’s representative body, capacity utilisation actually increased to 47%, an 11 percentage point gain from 36.4% recorded in the prior year.
The growth in capacity utilisation was achieved in a year companies lost 40% revenue due to Covid-19 lockdowns and challenges. At least 14% of the companies also had to retrench due to the pandemic.
The survey attributed the result to improved foreign currency availability, increased sales, and retooling.
Following the introduction of a new exchange rate system, the bulk of the foreign currency totalling US$650 million was used to import raw materials, machinery and equipment.
Apart from the foreign currency accessed from the central bank, there were other sources: self-generated, local banks and the parallel market.
Even better prospects in 2021
In total, merchandise imports are estimated to have registered an increase of 5.1% to US$4.7 billion in 2020, from US$4.5 billion in 2019, notwithstanding sharp declines in imports of energy, notably electricity, fuel, raw materials, machinery, manufactured goods and vehicles in the second quarter of 2020.
In another sign of improved economic activity, Zimbabwe’s export proceeds for 2020 amounted to US$4.7 billion compared to US$4.6 billion declared during the same period in 2019.
And despite economic uncertainties that still linger because of the Covid-19 pandemic, Zimbabwe is seeing hopeful prospects in 2021.
The CZI survey projected capacity utilisation in 2021 to increase to 61%, the highest level in a decade if there is a consistent policy process, currency stability and an aggressive vaccination programme.
The positive expectations come at a time Zimbabwe is also expecting a bumper harvest that will see maize production triple to 2.8 million tons for the 2020/21 agricultural season.