HARARE – A report on the dynamics of Zimbabwe’s power production produced by the Zimbabwe National Chamber of Commerce (ZNCC) two weeks ago represented what in listed firms would be a profit warning, which President Emmerson Mnangagwa’s administrate should seriously consider, or the wheels will completely come off, according to a review of the report released by Econometer Global Capital.
Zimbabwe has entered a more frightening phase in its long drawn economic crisis, with power now available six hours a day, while companies have been cutting production and scaling down staff to manage the crisis, said Econometer.
In addition, rains, which were projected to easy a debilitating power generation crisis, have not come as expected, while government still faces a huge challenge to rebuild infrastructure, including electricity plants, the report noted.
It was these factors, which have been compounded by gloom outlooks coming out of both government and international financial institutions, would need a government that responds in time to save the economy.
“It is our hope that President Mnangagwa who has distinguished himself as a listening president will adopt some of the recommendations made in the ZNCC survey to ensure that the economy can tick again,” said Econometer.
“In the absence of this, any hope of rebooting agriculture, manufacturing or mining will remain distant. The survey also came in as a profit warning for government as it revealed that most companies were this year expected to record losses or marginal profits. The country’s power utility is supplying electricity for less than hours every day. This has had serious socio-economic problems. As Zimbabwe faces erratic fuel supplies, business has been left in limbo,” it noted.
ZNCC said in the energy sector report that most companies said they had registered up to 50 percent cut in output and in monetary.
This means firms may have suffered billions in potential revenue this year alone.
Zimbabwe is already battling high levels of unemployment and rising inflation among other economic challenges.
In addition, low business activity resulting from the power crisis could lead to more cuts as most companies will find it unviable to rely on alternative sources of energy.
“For a country headed for recession this is shocking,” Econometer warned.
“According to the African Development Bank, Zimbabwe requires nearly US$35 billion to fund its infrastructure projects including energy. For a country with a huge debt burden, attracting concessionary funding for such projects requires much more than rhetoric. It should go beyond the Zimbabwe is open for business mantra,” the report added.
The energy sector requires huge capital and that capital can only be secured when Zimbabwe ticks a few boxes on its Doing Business rankings.
“Public Private Partnerships and Build Operate Transfer arrangements are but some of the options that government can promote in its quest to improve generation capacity. Unlike major oil producing countries like Nigeria that can rely on the commodity to generate power, Zimbabwe needs cleaner and sustainable sources of energy that will help industry flourish,” the report noted.