President Emmerson Mnangagwa will tomorrow come face to face with captains of industry feeling the heat of the worsening economic crisis amid higher expectations for solutions to the debilitating power cuts, cash shortages, inflation among other challenges, Business Times can report.
The crucial meeting taking place in the capital comes at a time Zimbabwe’s ailing companies are struggling to stay afloat, due to headwinds including crippling rolling power cuts lasting more than 12 hours daily, rising cost of production, rocketing exchange rate, and liquidity crunch and currency volatility, among other problems.
Foreign currency is also in short supply. Finding it has become one of the nightmares of the industry. The auction and the willing buyer willing seller markets are not being not efficient resulting in companies failing the forex from those markets.
This has compelled companies to source the forex to import critical raw materials from the black market where premiums are higher.
The situation may force many companies to shut down this year adding to an expanding corporate graveyard.
“…We finally meet President Mnangagwa tomorrow to discuss the best direction that the economy can take and the solutions to the current challenges (facing companies),” the Confederation of Zimbabwe Retailers president, Denford Mutashu, told Business Times.
Business leaders who spoke to Business Times yesterday said the business uncertainty was caused largely by debilitating power crisis, which has crippled industry.
Power utility ZESA is generating less than 700 megawatts (MW) daily from its five power stations in Kariba, Hwange, Bulawayo, Munyati and Harare.
This is against a national demand at peak periods of 2 200MW.
To cover for the shortfall, ZESA is importing from regional power utilities especially from South Africa Power utility, Eskom and Hydro Cahora Bassa of Mozambique.
However, the imports are inadequate as ZESA entered into non-firm contracts with the regional power utilities.
A non-firm contract means that the regional power utilities can only supply if they have surplus.
Exacerbating the situation is that Eskom and other regional power utilities are also battling electricity shortages, making it difficult for them to supply Zimbabwe.
So, to cover for the balance, ZESA is rolling out unscheduled load shedding.
Business leaders said the crippling power cuts have forced them to run on expensive diesel generators.
They said there was a need for President Mnangagwa’s intervention in the crisis.
“The business is facing a plethora of challenges which include foreign currency shortages, lack of patient capital, huge disparities on exchange rates, depreciation of local currency against US$ and inflation among other challenges. We need the President to help us to come up with solutions which can help the country to move forward,” a CEO of a local company, who requested not to be named, told Business Times yesterday.
He added: “But the greatest threat to our growth is the power crisis which, if not attended to, will r everse all the gains made so far as we are forced to cut operating hours to less than six hours per day due to unavailability of power.
“Using diesel generators is quite expensive and is adding more costs to the already ailing businesses.
“We need the highest office to intervene so that we can go back on track to grow the manufacturing sector that has suffered so much for a very long time.”
Zimbabwe is still battling with high inflation. The annual inflation rate stood at 92.3%in the month of February.
The exchange rate also remains a big problem.
The Zimbabwe dollar was this week trading at ZWL$904: US$1 at the auction system from ZWL$655:US$1 on December 1, 2022.
Economist Eddie Cross said tomorrow’s meeting should halt the tailspin.
“The business community is concerned with the high inflation rate and swelling exchange rate which are making it very difficult to sustain operations and plan properly. With the crunch meeting expected tomorrow, concrete solutions should be realised to record considerable growth going forward,” Cross said.
Other analysts said millions of dollars could have been lost due to the power crisis.