eBusiness Weekly
Albert Norumedzo
The Zimbabwean economic space has witnessed a wide spectrum of extremes when it comes to economic fortunes. For a good part of its history the country was the bread basket of Africa, as the agriculture sector thrived on commercial farming activities that painted the country green. Believe it or not, at one time the Zimbabwean dollar was once stronger than the US$ and at par with the British pound
The older generation calls those days, “the good old days” when hard formal honest work was the dream for all, it was prestigious to work in the government as policeman, teachers, nurses among other professions.
However, little one earned, they could plan, save and invest their income productively, that’s how the pre-millennium working class bought real estate and made decent investments during those days. If one thing stands out from those times, it’s that, hard work really paid off and education paid off even better.
In 1970s the country was recorded average GDP growth rates of 23 percent, buoyed by strong performance in agriculture, an upcoming mining sector and infrastructural development under the colonial government, but due to the liberation war struggle, sanctions and disturbances to production, growth dropped to -7 percent in 1977, and at independence as confidence returned, growth rebounded to 14.4 percent.
Over the decade to 1980, growth moderated around 5 percent. In 1992, a severe drought affected agriculture performance and dropped GDP growth in negative territory at -9 percent before bouncing back to 9 percent by 1994. A cocktail of policy and global economic developments saw signs of struggle emerge from the turn of the millennium going forth.
In 2000, GDP growth was at 3,1 percent and by 2003 it was -17 percent, the mayhem that followed up to 2009 left a tail of destruction never seen in the history of the country.
The onset of a multi-currency regime in 2009 brought stability and restored hope of a new beginning and a chance to rebuild.
From the good olden days to the drought of 1992, era of land reform programme, discovery of diamonds in Chiadzwa, hyperinflationary era, indigenisation, multi-currency regime to the present day foreign currency shortages, one thing remains a common, through all these chapters of economic history, opportunity.
A commonly held investment concept is that investment thrives on uncertainty because in the absence of the same, there would be no risk and with no risk there would be no incentive for extra return, in plain English fortune favours the brave, as such, while some lost fortunes due to the unfortunate turn of economic events, some became instant millionaires by seizing the opportunities that prevailed during those times.
During volatile times, many investors develop cold feet and begin to doubt their investment strategies. Some are even tempted to jump ship and return at a time when sobriety returns; there was a massive exodus of Zimbabweans to foreign lands during the periods of economic turbulence. Professionals who once took pride in the service of their country, left Zimbabwe for greener pastures in developing markets where some took up odd, menial jobs such as cleaning and care giving.
Call them risk averse, proactive; faint hearted, because they could not stay home and see it through, but whatever you call them, their exodus is testimony to the commonly held sentiment among many Zimbabweans is that those who stayed during the economic upheaval stayed not out of will but because they had nowhere to run.
The thing to realise is that market volatility is inevitable and risk is inherent in all markets, if you were in Europe you’d probably be worried about the next terror attack, which strike might while you on a bus going home.
If you were in the United States now you would be worried about the escalating geopolitical tension brewing over global military strength and most recently probably about Hurricane Catrina or Sofia or any other Hurricane; if you were in Asia you’d probably be worried about when the next earthquake will hit, where you will be when it hits and praying it doesn’t hit while you are watching soccer in a packed stadium.
The fact of the matter is that every market has its ills, its risks, its opportunities, its casualties, its rewards, its heroes and its victims and when in any market if you cannot leave the market, then you better decide which side you want to fall on. In current economic jungle, the first steps to survival are knowing your strengths and to quickly decide what you want to be, the hunter or the hunted.
While others are crying over the return of the high rate, others have quadrupled their investments on the stock market, some have even paid off their mortgages through investments that have responded to the call of uncertainty.
Do not get me wrong, economic stability is key to sustainable economic development and the prevailing economic environment is in a big way bad for business, but my point is to merely say what can the astute investor do, those that do not take the necessary steps to hedge their positions through counter strategies, however, unorthodox but legal, they will be at the receiving end and they will look back and see that they have nothing, but wounds to remember the times gone by while others talk about how they seized the opportunity in that confusion and built empires.
Necessity is the mother of all inventions, do not sit on your hands and wait for things to turn around, in the midst of all that confusion, that high rate and that parallel market stand up and be counted.
Albert Norumedzo is a financial analyst who writes in his own personal capacity. Feedback email: [email protected]
