Zimbabwe’s economy is recovering fast but its people don’t realise it


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Will the New Year open up an Era of Opportunity?

It has been my view for some time that the average Zimbabwean has not yet grasped the extent to which the ground under our feet has changed. Two years ago we had a grossly over-valued currency, we were running a massive budget deficit even though we were already in default as a country on our debts. We were importing over 70 per cent of our food and 95 per cent of what you saw in a supermarket was imported. Even before the onset of the Covid crisis our GDP was declining.

Correcting those problems required painful and extensive surgery – not palliatives. We have not yet arrived at the point where we can say we are back to normal, but just look around you today. There is no doubt, that unlike our neighbors to the south and the western world, the Zimbabwe economy is now recovering fast. By the end of December, I have no doubt in my own mind that our GDP will have largely recovered to earlier levels of activity. Our inflation rate has been below 4 per cent, month on month, for the past 4 months and I see little chance that it will again spiral out of control in 2021.

We have no shortages of any kind in the market, our exchange rate has corrected the imbalances that existed in 2018 and is now stable. Our balance of payments is in surplus and we have foreign exchange savings in our bank accounts. Whenever can any of us remember a time like this? We have had a rough ride in the past 100 years – let alone the past two decades. In my view, for the first time we have the internal capacity to settle our outstanding debts and once again resume a more normal relationship with the rest of the world.

What are going to be the major challenges in 2021? There are many but in my mind the major ones are relatively few. On the political front we have to make progress on re-engagement with the global community – not as supplicants but as an independent sovereign State that is trying very hard to find its way in the world. No easy, but I think this is possible.

Then we have to get our growing gold industry under control and management. We are potentially one of the largest gold producers in the world. Our industry is unlike many others in that our gold reserves are located over large areas in small or low value deposits. Our people have discovered this and we have probably 2 to 3 million people actively mining gold, in addition to about 600 formal mines.

Only a small proportion of this output is marketed here – in 2020, probably less than 20 tonnes worth US$1,4 billion. The rest is smuggled abroad and the proceeds either banked abroad or spent elsewhere. The local industry is plagued by criminal elements and armed gangs. This cannot go on. If we did we would enter a new era where we would have the resources to deal with our international debts, and resume normal relations with the global financial community. My own estimate is that we are losing US$2 billion a year.

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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