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Zimbabwe forex receipts up to $2.8bn

by Staff reporter
10 Jun 2018 at 09:15hrs | Views
Zimbabwe's economy has made a remarkable upswing since the beginning of year, with foreign currency receipts rising to $2,8 billion in the first five months of the year from the same period a year ago, while gold production has jumped an incredible 65 percent to 13,3 million tonnes in the same period.

This has raised expectations that Government will be able to achieve its revised growth target of 6 percent, Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya has said.

It is believed that the country will this year record the highest ever gold haul of 28 tonnes, as the second half of the season is traditionally regarded as the most productive.

Also, companies in consumer-facing industries such as telecommunications firm Econet Wireless Zimbabwe (EWZ), retailer OK Zimbabwe and apparel manufacture Edgars have also been recording rising profits, which have been linked to strong aggregate demand.

The new political administration plans to grow the economy by 6 percent per annum in the five-year period to 2023.

In an interview with The Sunday Mail last week, the central bank chief said growing consumer demand, rising fuel consumption — which has risen 30 percent since the beginning of the year — and soaring profits from businesses are all signs of a growing economy.

"The economy has been growing as evidenced by the increase in capacity utilisation across most sectors of the economy, from the manufacturing sector to tourism.

"A number of firms such as Delta, Econet, OK, Proplastics, Edgars, Seed  Co and others recorded impressive results that were released in the past few weeks.

"Such excellent results could not have been achieved if the economy was not expanding. Business confidence has also significantly improved during the past six months as is evidenced by the increase in consumer spending, including the increase in the demand for fuel of around 30 percent," said Dr Mangudya.

"Exports have responded very positively to the export incentive scheme; more so, given the firmness of the US dollar.

"Foreign currency receipts went up by 15 percent to $2,8 billion during the period January to May 2018 compared to the same period last year, with the bulk ($1,8 billion) being exports, $470 million loan proceeds and $500 million Diaspora and international remittances," he said.

In the full year to February 2018, the country's biggest mobile company by subscribers and assets, EWZ, reported that net profit rose by $96 million from a year earlier to $132 million.

Similarly, OK Zimbabwe indicated that its profit after tax in the year ended March 30 this year had jumped by 174 percent to $132 million from $36,2 million the previous year, which the grocer attributed to the successful 2017/2018 agricultural season.

The trend is continuing across all sectors of the economy.

Last week, Finance and Economic Development Minister Patrick Chinamasa said Treasury has reviewed the economic growth rate from 4,5 percent to 6 percent.

"I mentioned in the Budget that my projection (4,5 percent) was on the conservative side. I see our growth this year to be around 6 percent. We can achieve that easily when I look at what is taking place in the economy and the measures we are taking to grow the economy. I am looking for contribution towards that projected growth to come mainly from mining, tourism, as well as revival of manufacturing and also from agriculture."

However, the World Bank was more conservative as it upgraded its forecast last week to 2,7 percent from its initial projection of 1,8 percent.

But Government has had to invest more effort in trying to sustain the growth momentum, as growing demand and consumption in the economy is stretching foreign currency demand.

Added Dr Mangudya: "The side effect of the growing economy is being felt on the increase in the demand for foreign currency to procure feedstock for industry and to replenish consumables across the economy.

"An expanding economy requires more foreign currency. This situation is exacerbated by the fact that Zimbabwe is using foreign currency as its domestic currency. The open for business proposition has created a very healthy competitive economic environment which calls for industrial revival, which is currently being witnessed within the economy."

He also noted that there was progress in both the mining and tourism as well.

"Other sectors of the economy such as mining have also shown signs of significant growth, with gold production having reached 13,3 tonnes for the five-month period, January to May 2018, a growth of more than 65 percent over the same period last year. Tourist arrivals have also been on the increase, with impressive hotel occupancy rate. The outlook therefore looks quite positive," he said.

Confederation of Zimbabwe Industries (CZI) president Mr Sifelani Jabangwe is also upbeat, saying production in industry was rising.

"The performance indicators are showing a positive trend. Capacity utilisation has increased and exports have grown. The PMI is an indicator that tells you whether the economy is stagnant, expanding or contracting.

"Where it is now, that is above 50, it shows you that the economy is expanding.

"Now, when you look at the business confidence, it is negative for the first quarter, for us to understand why it is negative we must look at the fourth quarter.

"The reason for this is to do with currency. What has made businesses to be pessimistic was that in the first quarter it was not easy to get foreign currency. But on the performance indicators it is showing that the economy is performing well and it is expanding.

''This is corroborated by data from listed companies."

CZI is the country biggest business representative body.

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Source - zimpapers
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