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It has been a tough year for the economy of Zimbabwe. The East African nation, despite changing its currency more than once in a year, is in the mire of financial crises.
The way things are going, the situation may worsen in 2020, especially as the President Emmerson Mnangagwa’s administration has seemingly run out of options.
According to a today Business Insider report, a majority of South African businesses operating in Zimbabwe have hit a rough patch. The tremendous economic crisis has taken it toll on at least 20 of the 355 JSE-listed companies operating in the country.
Zimbabwe currently has the second highest inflation rate in the world, coming only after Venezuela. According to a statement released by the International Monetary Fund at the end of September this year, the country’s inflation in August reached an annual rate of almost 300 percent.
The report revealed that the nation’s economic growth in 2019 would be “steeply negative”, with an estimated contraction of 7.1 percent.
The signs are that 2020 would not be any better for the country, as foreign currency exchange is ceaselessly ravaging Zimbabwe’s import reliant economy.
There have been protests on the shortage of fuel and food, climaxing in a serious security crackdown in January. Even after floating and reshaping its currency and restricting USD use.
September, the country’s apex bank sold Treasury bills worth USD 971 Mn to pay government debt without lawmaker approval. Even though this move boosted supply, the local currency’s strength suffered a weakening fate.
In a bid to make revenue by all means, the government is trying to attract investments into the country’s mining sector. According to reports, mining companies operating in Zimbabwe are doing well despite the harsh business conditions. Earlier in the year, WeeTracker reported that Zimbabwean diamonds were to contribute USD 1 Bn to its mining industry.
Also a producer of platinum, chromite and gold – stands a more significant chance at turning things around for the country’s depleted foreign currency reserves.
Zimbabwe’s greater economic weaknesses are still a chunky growth barrier, in fact, deterring investment into the mining sector. The mining input has thus dwindled in the wake of lack of new productions going online.
That said, Mnangagwa’s administration has been -once again – lobbying heavily abroad for new mining investments. And there are some signs that, with time, those investments could help revive the country’s economic fortunes.
Image Courtesy: MDTV.com
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