2020 Achievements and in Retrospect
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2020 ACHIEVEMENTS AND IN RETROSPECT 1 PRESIDENT’S REMARKS The year 2020 was characterised by the COVID-19 pandemic that hit not only Zimbabwe but the rest of the World. The pandemic continues to weigh on business, and resulted in the disruption of global supply chains for both raw materials and final products and services and a slowdown of global financial flows. Dr Tinashe Manzungu The Zimbabwe National Chamber of Commerce recognises the role that business plays to achieve our shared goal during this crisis, to maintain jobs and business continuity; to support health, stability and social well-being of the Zimbabwe populace. Despite the effects of the pandemic the Chamber continued and continues to make strides in servicing its members given that business is the antidote for an economic recovery, hence this report outlines achievements by the Chamber during the year 2020. Over the year, the Chamber continued to engage with policy makers and engagements continued to provide a harmonious and productive working relationship between Government and the Private Sector. While the year has been characterised by the effects of the covid-19 pandemic, the Chamber acknowledges efforts by the Government in addressing constraints on the economic front. These include; Introduction of a forex auction system which has somehow helped in both price discovery of our exchange rate as well as availability of forex. Quite a number of our members can now access forex which was not feasible in the first half of 2020 Infrastructure expansion projects which are domestically funded. Notable infrastructure projects include the Beitbridge - Chirundu Highway and the expansion of the Robert Mugabe International Airport Zimbabwe ranking third on Budget Transparency in Africa in terms of the Open Budget Survey (OBS) 2019 2020 Ease of Doing Business Ranking – where Zimbabwe managed to register some significant improvements, moving from position 155 in the world up to 140 out of 190 countries However, the Chamber continues to engage Government on challenges which continue to weigh on the ease of doing business. The year 2020 saw the Chamber rebranding in line with the modern trends and demands of the new economy. The Chamber also launched the ZNCC Training Centre in 2020. These initiatives were carried out to bring out chambers desire to speak into future and emphasise its role in the economy. 2 CEO’S REMARKS Who will call the shots around the world in 2021? Tech giants have become so powerful to silence most powerful voices like we saw with Twitter and Facebook silencing the former US president; Donald Trump. Boris Johnson is still suffering from identity crisis after Brexit is to be followed by intention to join the Pacific trade group. Christopher T Mugaga In Uganda an election pitting the incumbent Museveni and the youthful pop star Robert Kyagulanyi (Bob Wine) has sent warning shots to powerful African leaders of their shaky future in the mix of Agenda 2063 which the African Union has committed to. In SA, the Zondo Commission is coming to a conclusion with scams of corruption and misgovernance making everyone wonder if the Pretoria administration is ready to superintend over the most advanced economy in Africa. Zimbabwe is no exception with the impact of hard lockdown to remain even 5 years post the pandemic, in fact we expect almost 40% of SMEs not to survive this harsh period. Zimbabwe’s private sector is undeniably one of the most hard hit constituencies in the country and as a Chamber our commitment remains predicated on lobbying for the survival of businesses, their growth and expansion into regional markets whilst at the same time making sure that anti-business policy measures are loudly decried. It is indeed one of the most difficult periods for our members and we continue encouraging open communication between you and us as your challenges are the reason for our existence, we are obliged to tackle such challenges. Let me take this opportunity once again to remind you of the new ZNCC Training Centre which we launched last year, its purpose remains to capacitate your skills in growing your business concerns to markets beyond Zimbabwe. We believe it’s the best path to mitigate against the harsh effects of these trying times knowing fully well that empowerment through education is the most tried and tested means to adopt to the new normal. It’s no longer business as usual, corporate strategies have to shift, organisational culture has to move in tandem with new focus areas and 80% of sales are now concluded virtually compared to the same time last year when only at most 10% of deals were concluded virtually; what a disruptor the virus has become, hence the need to take advantage of the Chamber’s Training Centre. This year, ladies and gentlemen, we are following up on the survey we did last year by proposing a blue print on “Post Covid-19 Recovery Strategy & Reconstruction.” Unlike many years when our focus has been on interrogating the challenges impacting on our businesses, the focus has become proactive as we aim to set the pace in proffering solutions to our policy makers. Your contributions towards our upcoming policy blue print to deal with the after effects of the Pandemic are welcome and together we go far! 3 No nation and no government would have found this pandemic easy to deal with and none has performed perfectly. However, as we reflect on 2020 it is undeniable that some countries have handled the virus better than others and that there are lessons all governments must learn. Crucially, we must learn to cooperate better. This is not a race in which a single business will emerge the winner, nor a virus we can fight alone. Zimbabwe s economy had a pre-existing condition. The economy was ill before the corona virus crisis - and will still be unwell when it has passed. We expect a sharp decline in GDP, tempered by a dragged increase in the latter half of the year, assuming a significant catch up for diminished consumption and investment spending. Privately, many speculate about a multi-year decline. The snail pace adjustment of the forex auction rate is no longer signalling a strengthening currency but rather an exchange rate management culture scared of a pressing rising demand for forex post unnecessarily too hard lockdowns we continue covering ourselves in . As the year 2021 opens up, let us remember to renew our membership subscriptions, these are indeed tough moments and it is safer to belong than to stand aloof hoping such a ravaging threat can be tamed with our solo brilliance, Never!!!!! Thank you and may the Lord bless you all and remember to observe all WHO Health Guidelines together with supporting measures from our government. 4 ZNCC BRIEF ON 2021 ECONOMIC OUTLOOK Never in recent memory has so much uncertainty hung over global as well as Zimbabwe’s growth prospects. That is not just because prospects for the Zimbabwean economy depend on how much we handle the virus and the vaccine rollout. It is also because it is unknown just how much lasting damage the pandemic has done as it has choked economic growth, shut down a number of enterprises, with the recent case of Greyhound/Citiliner a tale tell, and left workers jobless. Its full impact on Zimbabwe has been obscured by limited demand for forex notably with almost 70% of industry hermetically sealed off. In other blessed economies, the massive emergency government intervention to bail out companies and support workers has somehow equally obscured its impact in such economies too. Only when that support is withdrawn will the veil be lifted. For Zimbabwe, a mispriced exchange rate is certainly sending wrong signals about the market sentiment with confusing trade and fiscal surpluses only of academic relevance once we factor in the inability of the Zimbabwean government to import the drugs without support from either private sector or donor community. Just as epidemiologists have had to learn about the virus as it advances, economists must judge its economic toll on the fly. Monetary policy is the most predictable part of the economic landscape, but the same does not apply to Zimbabwe with fire fighting monetary interventions continuously choking the wherewithal to plan ahead by private sector and to a certain extent households. The real action has to be in fiscal policy. Governments must judge whether the economic recovery needs more help. Unlike USA, the nation of Zimbabwe does not have to spend a month of Sundays to pass emergency bills which are pro-growth. We witnessed President Trump struggling to pass more stimulus even as their economy is taking an unprecedented nosedive. Across the rich world, too rapid a turn to fiscal austerity is risky as governments fret about deficits, notably when a rapid rebound in activity is mistaken for a full recovery. With monetary policy more or less fixed, the effect of tax and spending decisions will be amplified. Watching the behaviour of finance ministers will be more important than studying central banks. It is argued that the pandemic has not put as much pressure on their exchange rates and foreign exchange reserves as initially focused. With an exchange rate dictated by market for essential goods, it remains a mystery to try placing a prediction on Zimbabwe’s exchange rate, but one thing for sure the local unit can only continue depreciating albeit at a slow pace not due to economic fundamentals but rather the presumed threat a free exchange rate is said to pose to a nation with a zero forex reserve balances. Going forward, we expect an elevated demand for forex as black market is expected to fund at least 60% of market needs for the forex.