HARARE – Zimbabwe’s economy is relapsing at a worrying pace than what many see, and the country could be stuck in a vicious trap unless tremendous efforts are made to stop the rot, according to the Confederation of Zimbabwe Industries (CZI).
CZI president, Henry Ruzvidzo told a local newspaper Thursday that the hurdles that hit Zimbabwe’s freefalling economy last year, inflicting significant damage to manufacturing firms left many firms closed.
Several reverted to utilising only their night shifts due to a gruelling power crisis characterised by blackouts of up to 22 hours a day.
Ruzvidzo’s comments sends strong signals to authorities that the country could be at the threshold of another brutal meltdown, a year into the reintroduction of the Zimbabwe dollar following a decade in a multicurrency system.
He rarely portrays the image of an economy in the doldrums.
“As companies we have given indications of where things are going and the results of the survey showed our concerns,” the CZI president told the newspaper, referring to result of the 2019 Manufacturing Sector Survey due to be released on February 14.
“It has not been as bad as we thought but we are moving in the wrong direction. The economy is in a trap and real decisive action is needed to get out of this trap, otherwise we remain there. There are companies that have closed, some have changed shifts. They come for work in the evening because of power problems. We hope the situation will be better this year because Lake Kariba is rising and there have been negotiations to improve power imports,” he said.
At the heart of the crisis that saw more that 20 000 workers loss jobs last year, according to the Zimbabwe National Chamber of Commerce, is a terrifying power crisis that has been compounded by a drop in water levels at Lake Kariba after two consecutive seasons of drought.
This has affected power production at the 1 050-megawatt (MW) Kariba Hydroelectric Power Station, the main source of electricity for Zimbabwe.
Year on year inflation reached 521 percent in December last year, from about 440 percent in November, according to CZI’s internal computations.
In November last year, the country banned announcement of annual inflation figures until next month.
Foreign currency shortages, high utility costs, declining demand and a volatile exchange rate are among the hurdles affecting the country’s industries.
Ruzvidzo said despite the industrial crisis, some manufacturing companies had innovated to remain above the waters.
“Industries have switched to local raw materials and local content has been increased in our products,” he said.
“Some companies have stopped manufacturing products that require imported raw materials, while others have been paying ZESA (national power company) foreign currency. Some isolated companies are performing well. Some have consistent energy supply such as those in the Eastern Highlands were there are mini hydro power plants,” he was quoted as saying.