HARARE – The last time I was in Harare was in 1998 before the so-called collapse of the Zimbabwean economy due to hyper inflation and a host of other factors. I recall visiting a vibrant metropolitan city that could rival any major city in the world. However, at the time my visit was confined to a small stretch of the central business district of the capital where I was attending a conference.
This time around I was fortunate to be able to visit Victoria Falls after which I drove down to Bulawayo and through to Harare. I witnessed first hand what was once Africa’s most promising economy. Surprisingly, and contrary to most international news reports, the national roads were in a very good condition and as a result the trip went off without a hitch. I also managed to spend quite a bit of time in Harare and visited various neighbourhoods, which was quite an eye-opener.
However, within the cities and towns the effects of the western sanctions became devastatingly clear as potholes littered most roads and water and electricity cuts were a common occurrence. But despite this, the majority of the population seemed quite optimistic considering a formal unemployment rate of over 95 percent, an enormous import bill against poor exports and a ballooning foreign debt. During 2013, Zimbabwe imported US$11 billion worth of goods against US$3 billion worth of exports, which created a US$5 billion trade deficit. This created some apprehension in the economy that the high import bill against a worsening illiquidity could turn Zimbabwe into a nation of traders.
In a nutshell, the empowerment initiatives of the Zimbabwean government are quite evident throughout the country. The majority of fuel stations and franchises are locally-owned and most Zimbabweans are involved in some form of informal trading. Even some town councils have become innovative to the extent that they have started using solar powered traffic lights, thereby relinquishing their reliance on the sporadic power supply.
Most citizens have also installed water tanks in their yards to supplement the unreliable water service. When talking to some of Harare’s residents it was clear that many people have come to accept service interruptions as normal and have made backup plans, even going as far as planting their own basic crops either in their yards or in their neighbourhoods.
However, personally, one of the most confusing aspects of my visit to Harare was the continued use of the multi-currency system in Zimbabwe following the demise of the local currency in 2008. The Zimbabwean central bank recently quashed rumours suggesting the return of the Zim Dollar and confirmed the use of multiple currencies.
Towards the end of last year President Robert Mugabe said the reintroduction of the Zim Dollar would be dealt with “when the time comes – we will be very cautious and gradual about it.” And while the use of various currencies like the US Dollar, British Pound, South African Rand and Botswana Pula is widely accepted, it was quite concerning to note that different vendors made up their own exchange rates on any given day. When at Victoria Falls and when using different fuel stations throughout Zimbabwe the exchange rate for the US Dollar fluctuated between 9 to 1 up to 11 to 1 to the Rand.
At the beginning of August last year the central bank confirmed that the multi-currency regime would be with Zimbabwe for the foreseeable future and when the time comes, the local currency is expected to circulate alongside other existing currencies providing people with a choice of which currency to hold. “Stakeholders are also advised that the multi-currency regime is not an area of emotional choice or option but rather a measure officially introduced in January 2009 as part of our adaptive economic strategy and a pragmatic response to the challenges of the day,” read a statement by the central bank.
To make matters even more complex the the Confederation of Zimbabwe Industries (CZI) recently proposed the adoption of the Chinese Yuan in the country’s basket of currencies to improve the liquidity crisis. Several business people in Zimbabwe have also recommended that the country join the Southern African Customs Union (SACU), which currently includes Botswana, Lesotho, Namibia, South Africa and Swaziland.
All in all the signs are clear that the Zimbabwean economy is rebounding at a rapid rate. The supermarket shelves are fully stocked and besides Victoria Falls I didn’t experience any queues at fuel stations. The capital city of Harare, while facing numerous challenges, is still a hive of activity and the people are highly professional and quite welcoming. And even while the country’s official growth rate was recently revised downwards from around 9 percent to just over 5 percent, this is still a positive growth. No matter what the current state of the money market or the liquidity in the country, the Zimbabwean economy is growing and its people are continuing to prosper.
By Edgar Brandt