Ndamu Sandu
5 April 2008
Harare — ZANU PF's loss of a majority in the House of Assembly must be seen as the prelude to the revival of the economy from an eight-year battering, analysts said last week.
Zanu PF polled 97 against the opposition's combined haul of 110 seats.
In the past Zanu PF had used its majority to railroad into law populist policies, notably the Indigenisation and Economic Empowerment Bill to curry favour with the electorate.
The Bill, signed into law by President Robert Mugabe shortly before the elections, proposes a 51% shareholding by locals in all foreign-owned companies in the country.
It is the House of Assembly that gave life to the Godwills Masimirembwa-led National Incomes and Pricing Commission (NIPC), creating consternation among business leaders.
Analysts say the post-election period must be used to pick up the pieces of the battered business community, turned into sacrificial lambs in the run-up to the election.
In the run-up, the business community was accused of being part of a "regime change" agenda, whose lynch-pin was an increase of prices of basic commodities way beyond the reach of ordinary citizens.
"It is a post-conflict situation," said economic consultant Dr Daniel Ndlela. "Business needs policy space to begin to work again so that it can plan in a predictable environment."
With the country's foreign currency coffers dry, the central bank had resorted to raiding individual and company Foreign Currency Accounts to finance critical imports.
Since the turn of the millennium, Zimbabwe has not received balance of payments support from multilateral financial institutions after failing to settle its arrears.
This has always been viewed as a form of Western sanctions.
Analysts say in the post-election period, the authorities have to re-engage the international community to negotiate lines of credit.
Foreign currency inflows into the country would be used to stabilize the exchange rate, analysts say.
Marah Hativagone, Zimbabwe National Chamber of Commerce president said whatever the outcome of the elections, business yearns for a better working environment
"We have been at the receiving end of government . . . Whichever way, as business we want a better environment," she said.
Businesses are choked by price controls. In addition, they are grappling with foreign currency shortages to import raw materials and are plagued by power and water cuts.
Hativagone told Standardbusiness commerce and industry have been vociferous in their calls for the removal of price controls.
"We have always called for the removal of price controls. We need to work on the fundamentals to ensure that things get better," she said.
Ndlela agrees: "When prices are free no one will charge higher prices as businesses compete in providing the lowest prices."
Price controls on basic commodities were last year extended to all goods and services as the government plunged headlong in a populist frenzy. This was after the price blitz that left supermarket shelves empty.
In June last year, the government ordered all businesses to slash prices by half, in an ill-advised move whose repercussions are still being felt.
Businesses are throttled by foreign currency shortages to import raw materials and spare parts, which has impacted on production.
The Basic Commodities Supply Side Intervention (BACOSSI) facility introduced by central bank chief Gideon Gono in October brought only temporary relief to stressed companies. Under BACOSSI, producers of basic commodities accessed cheap loans to boost production.
Figures from the RBZ show that as at 8 January, US$13.5 million and $18.6 trillion had been disbursed under the facility.
In his Monetary Policy Statement in January, Gono said BACOSSI had rescued some companies from collapse.
"The BACOSSI facility has gone a long way in restoring productivity for beneficiary manufacturers and retailers, some of which were on the brink of closure due to high production and delivery costs," he said.
As a result of the facility, companies such as National Foods and Blue Ribbon, among others, had seen capacity utilization improving from as low as 10% to as high as 65% on the back of cheap funding, the governor said.
Gono's BACOSSI intervention is a drop in the ocean of what the industry requires. In an interview with Standardbusiness last month, Callisto Jokonya, Confederation of Zimbabwe Industries president, said industry needed US$2 billion to recover.
Inflation -- fuelled by excessive printing of money and multiple exchange rates -- has posed a threat to businesses and individuals. At 165 000%, Zimbabwe's inflation is the highest in the world, an unprecedented situation in a country not involved in a war.
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