eBusiness Weekly
Business Writer
Zimbabwe’s economy is expected to maintain a positive growth trajectory in 2022 with economic analysts predicting a rise in capital expenditure by local corporates as they embark on retooling following the disturbances caused by Covid 19 pandemic.
A considerable number of businesses relapsed since the advent of Covid 19 pandemic in early 2020 as they responded to restrictive measures employed by the Government to curb the spread of the ailment.
However, economic activity started to rise in 2021 on the back of relaxed lockdowns and restrictions, thereby encouraging local economic growth as demand for products and services spiked.
Good metal commodity prices on the international market and a sound agricultural harvest from the 2020-21 summer cropping season left the local economy on a sound footing and mending.
On the other hand, there was increased spending on the part of the Government as it embarked on construction activities, particularly road infrastructure refurbishment and completion of dam projects dotted around the country with contracts being awarded to local firms.
Resultantly, the local economy grew by 5, 1 percent according to World Bank’s recent report.
Experts see a continuation of economic growth in 2022, particularly banking on the rebound of a number of industries as some firms have come up with mechanisms to deal with the Covid 19 pandemic, which health experts have started to pronounce as endemic.
At the forefront of the industries to rebound is the tourism sector buoyed in some cases by local visitors.
In a bid to alleviate the menacing challenges in the sector, Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mangudya through the Monetary Policy Statement (MPS) last week, indicated that tourism and hospitality industry players were now allowed to retain all of the earned foreign currency.
The measure is a timely intervention as it came at a time when the tourism and hospitality industry is at its lowest.
The decision by the RBZ to allow players in the tourism and hospitality sector to retain 100 percent of their foreign currency earnings is anticipated to speed the recapitalisation of the sector.
In that regard, while giving his perspective on the 2022 economic outlook, head of fund management at Imara Asset Management Zimbabwe, Shelton Sibanda, indicated that there was a prospect of boosted capital expenditure amongst local companies as they embark on a retooling exercise.
He further highlighted that the recapitalisation process would be made easier given the availability of the foreign exchange in the economy coupled with supply from the auction system.
“What we are likely going to see this year is a further increase in investment by local businesses in terms of retooling their business, so you will see a lot of capital expenditure that businesses had shelved as they had gone back to the default is just survival mode.
“…because most of the businesses right now are generating a relatively larger portion of their sales in United States Dollar they will now be able to retool which will be augmented by what they get from the auction system. The US dollar has helped businesses to retool,” said Sibanda.
He is of the view that economic growth momentum realised in 2021 is likely to persist in 2022 abetted by the present dual currency regime.
“We are in a good space at the moment, we are likely to continue with this recovery that we have had, we might not have the same growth as last year but we might continue to have a bit of uptake.
“This recovery can be sustained if we maintain the dual currency setup that we have now as it gives advantage to corporates,” he added.
Furthermore, he highlighted that a rebound in the tourism and hospitality sector is likely to help and sustain the growth momentum from last year GDP perspective.
He said: “This is one sector that was missing last year when you look at our GDP growth.”
The tourism industry in particular is entering a phase where they are recapitalising following a serious battering by the Covid 19 pandemic since March 2020.
