Is there light at the end of the tunnel?

There have been some revelations that an Indian steel making firm, Essar Africa Holdings Limited (EAHL) is set to come to the rescue of power utility ZESA. The firm is set to construct  and operate a 600 Megawatt (MW) station to generate and supply electricity across Zimbabwe. The generation station by EAHL will be situated in the Sinamatela area, about 2kilometres from the Hwange airstrip.

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This move will reflect positively on business as most companies are aching from losses resulting from absence of power. Industrial companies in most of Bulawayo are operating at 40% capacity, with their capacity utilisation deficit standing at a staggering 60%. 

Electricity hick ups have been a constant occurrence in most households and businesses.  Most companies have been running at an expense channeling their much needed revenue towards buying high capacity generators and fuel to run these generators at the expense of the organisations. 

It is my hope that an eventual growth in the power sector due to privatisation will enhance economic growth particularly in the industrial sector which had to retrench several of its employees. 

In just a few easy steps

Sanctions or no sanctions economic reform can be achieved. Zimbabwe formerly Rhodesia performed quite well under a sanctioned environment. It was self sufficient and largely avoided the impact of the embargo.  Self sustainability this time could enhance the lives of the majority rather than a few minorities.

This week, I took the liberty to explore various steps in which the Zimbabwean economy could take on an eventual recovery scheme:

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Firstly it is imperative that the country’s leaders reach consensus on important political matters. From this realisation, credit lines will open up and debt may be cancelled to encourage the state’s fiscus to grow.

Secondly, a moral boost for the people directly affected by the economy would be significant. To benefit from ‘within’ government policies should be ‘without’ oriented. Investment opportunities in natural resources should be increased as diamonds revenue is expected to rack in excess of US$600million annually.

 A complete overhaul of the financial sector is needed, with the employment of the Diasporan community which for over a decade acquired immense skill in all sectors of the economy in countries such as South Africa and Australia. 

Salaries which have been at the height of disputes between the Finance Ministry and civil service will increase thereby motivating the populace.

By then the economy will be following in the footsteps of market driven economies like Canada.

All this can take place in a matter of 5years if the leadership adopts all available means to ensure all citizens are satisfied within and without Zimbabwe’s borders.

Indigenisation stunt poses serious ramifications for Zim

A series of articles have been written about the issue of Indigenisation but what really is indigenisation.  In layman terms, indigenisation refers to the ownership of property by people native to a certain country.  The indigenisation has sparked numerous debates in the country centered on whether it benefits  the ordinary man on the street or whether it is just a mere machination by political fat cats to increase their coffers.   From my own understanding the Indigenisation process may harm the economy in much the same way as the land reform process spiralled the economy out of its bread basket status into a basket case in a matter of a few years.



The face of land reform...

Economists present the argument that the economy is at a critical stage of growth; it will hurt the economy to lose the little investment offered by countries such as South Africa in the form of Impala Platinum (Implats) - which owns 87% of Zimplats practical. It would virtually destroy the country's last remaining chance of staging a worthwhile economic recovery.  The country cannot on it’s own finance recovery and development. The insistence on majority local ownership will reduce the availability of capital while raising its cost. It will mean less investment and slower growth. Another debate, would I as an individual have enough buying power to access shares from such entities.  The ordinary individual in this context needs to be redefined because of the social and political dynamics behind this so called “indigenization”.

Under the Zimbabwe's indigenisation law, from the regulations  first published in February 2010 stipulate that any foreign-owned business with net assets of more than $500,000 must divest 51 per cent of its shares to indigenous Zimbabweans within a five year period. An indigenous Zimbabwean is defined as persons who suffered under colonial-era racial discrimination and their children born after independence in 1980 – which in practice means mainly black Zimbabweans. Those include reneging on contracts previously struck with Implats and grabbing 51% of the assets of all the mining companies operating in the country.

 

International airlines fizzle out Air Zimbabwe?

The competitive airline set to grace Zimbabwean skies...

One of the world’s leading airlines Emirates recently launched its inaugural flight to Zimbabwe via Zambia on the 1^st of February 2012.  A first for Zimbabwe, Emirates will fly 5 times a week. Although this has sparked renewed hope for horticultural producers and business people alike, our local airline continues to bleed. 

In recent times Air Zimbabwe has been experiencing industrial action by pilots, debilitating air traffic control equipment, not to mention the ageing fleet of aircraft.  According to sources Air Zimbabwe is in the process of near liquidation with most of its assets undergoing Judicial Management with debt in excess of USD 140million. 

The airline will be plying the Dubai-Harare route.  Such trends have also seen Zimbabwe losing the Johannesburg-Victoria Falls route to SAA.  It has been revealed that Emirates employs 87 Zimbabweans worldwide of probably foreign educated universities which leave several local trained pilots and airline staff in the doldrums.  It appears the adoption of more foreign airlines at the expense of our own local airline industry.

International flights has opened up the country to new markets and increased the possibility of growth within the tourism industry.  Unfortunately the ordinary Zimbabwean is deprived of a wholly Zimbabwean national carrier.