Zimbabwe: Companies call for political reforms as economy crumbles

Companies operating in Zimbabwe have bemoaned the continuous depreciation of the local dollar's value making the operating environment highly unpredictable.

To stabilise the crumbling, some companies have called for the government to immediately implement political reforms.

In a recent trading update, Paper and Packaging Group, NAMPAK Zimbabwe, said the three month period from 1 October 2019 to 31 December 2019 remained characterised by the continuing problems of scarce foreign exchange, rising inflation as well as power and fuel shortages.

"Since October 2019 the exchange rate depreciated by a further twelve percent with the inter-bank rate at 31 December 2019 at $17 to the US dollar while year on year inflation is now estimated, without the use of official statistics that are no longer released, to be in excess of 520%," the company said

The company reported that revenue for the three months under review was 809% as a result of inflation which boosted prices, although gross margins have come under pressure in order to remain competitive.

"We continue to hope that the much needed macro-economic and political reforms can be accelerated in order to attract foreign direct investment support," the firm said.

According Hippo Valley Estates' board chairperson, Dan Marokane, the recent firm's challenging performance where due to the Zimbabwe dollar's instability.

"Following the re-introduction of the local currency in February 2019 and the subsequent abandonment of the multi-currency system in June 2019, Zimbabwe's inflation accelerated substantially as the local currency continued to devalue against the major currencies," said Marokane.

He said the firm suffered an 11.2 % decline in local sales volumes owing to general lack of disposable incomes among consumers whose incomes have been affected by the inflation linked value erosion.

Power Speed Electrical also said the continuing economic shrinkage means that all Zimbabweans are becoming poorer and disposable income are declining steadily.

"This will mean reduced income for all businesses and individuals and we expect that we will not be an exception. Both the market and the environment remains extremely volatile which means that our business position remains extremely unpredictable," said the company.