How does one describe 2017? Seems like a very simple question, but how does one describe a year that saw local stock markets breaking all-time records and yet company fundamentals should have seen stocks heading the other way — down. How does one describe the political environment in a year that ended with the dramatic change in power but was largely characterised by the “persecution and expulsion” of those that ended up in power.
Do you say it was a tough year? Do you say the year was grimmer or you say it gave you a glimmer of hope? Probably the best way to sum it, is to say the year had its ups and downs, probably more of the latter.
As this is our first Taking Stock issue in 2018, it is always good to start by looking at 2017 in retrospect, highlighting those ups and downs. We can then move forward and also highlight our expectations for the New Year.
It’s safe to say the better part of last year was characterized by a sense of hopelessness.
It was not easy, for the general populace, to see politicians and by extension government leaders concentrating more on political bickering at a time the economy was crying for solutions that could turnaround the fortunes of the country.
When people were sleeping in bank queues, looking for the much needed cash, politicians and top government officials including ministers of key ministries, were going around the country to do nothing but shout at each other. When companies were crying out for foreign currency to import raw materials and key machinery, Government officials and influential politicians were flying overseas in unnecessary numbers, crowding out industry in terms of foreign currency allocations.
The 2018 National Budget presented by Finance and Economic Planning Minister Patrick Chinamasa late last year speaks to the wastages that were taking place in the previous administration.
Minister Chinamasa reviewed downwards the size of delegations to regional and international forums, saying that a diplomatic presence in destination countries will be used to represent the country.
He said government will also be enforcing restrictions on travel class, with only ministers and a few others being allowed to travel business class.
“Disciplinary measures will be instituted against anyone in violation of this directive and the cost incurred on such travel will be recovered directly from the individual involved,” said Minister Chinamasa.
It would be foolhardy to think that the changes that culminated in the inauguration of President Emmerson Mnangagwa, on the 24th of November 2017, will result in an immediate end to the challenges that have been bedevilling the country. This has already been proven with relentless price hikes remaining a thorn in the flesh for consumers. Efforts have been made with government engaging business to try and come up with sustainable solutions, but as we write this article, prices are still high if not increasing.
This, however, does not mean the challenges at hand are insurmountable. Whatever challenges we are facing today have been simmering for quite a while and it will take a bit of time for them to be successfully tackled. We have to start somewhere and increasing productivity is a top priority. While excuses have been given that lack of access to foreign currency is hindering production there is need to identify areas that do not necessarily require much foreign inputs or have minimal forex requirements versus the potential output. In agriculture we require fertiliser, the bulk of which is imported including raw materials, but how does that fare against production and forex savings in a good season. Maximum support should thus be given to this critical sector, after all President Mnangagwa said the country’s economy is predicated on this sector.
The latest trade figures should also be used to identify areas of which we have potential to export and make sure that all the necessary support is availed so that we can produce even more. Tobacco exports in November reached $284 million compared to $86 million in October and the question is, have we done enough to increase production late alone value add? Gold exports also rose from $95 million in October to $110 million in November and along with our other minerals, efforts should be made to make sure that we get every potential forex earning to the last cent. Has enough been done to curb smuggling and under invoicing or rather has enough been done to address reasons why players end up engaging in such practices?
There is plenty that needs to be done but we have touched just a few mostly related to forex earnings as this has been the cause of much of the pain that we are experiencing as a nation.