Wednesday, March 24, 2010

Economic Malaise

I had some interesting meetings yesterday with various people – a respected economist, a labour consultant, a businessman. I heard the following ‘facts’ about the Zimbabwean economy as of yesterday: -

1. Zimbabwe’s formal employment level is now less than it was in 1970 while the population has doubled.
2. 2008 was a very bad year for exports. 2009, after US dollarisation of the economy was worse.
3. Cash held by the banks in Zimbabwe is one-fifth of the cash held in Botswana’s banks. Botswana’s population is less than half of Zimbabwe’s population
4. Most businesses are over-staffed with the wrong skills. Retrenchment should be an option to save the business, but in Zimbabwe retrenchment packages are so huge, that retrenchment is not a business option for the employer. A retrenchment package in South Africa is likely to be in the region of two weeks salary. In Zimbabwe it is more likely to be two years salary.
5. The ZCTU is currently trying to get legislation introduced whereby people are paid according to their family needs – the more dependents, the bigger the wage.
6. We already have a situation where an employee can be off work for almost a year, and still get paid even if he doesn’t report for work for one single day of that year. In the case of pregnant women the situation is even worse for the employer.
7. A school leaver in Zimbabwe today has absolutely no chance whatever of securing employment in Zimbabwe and will, of necessity, have to look elsewhere, unless he wants to work for the Chinese (see below).
8. A Chinese company has a contract to lay hundreds of kilometres of fibre optic cable throughout the country. The trenches are being dug manually. The manual labourers are being paid 50 US cents per day – i.e. $10.00 per month. A 20 kg bag of mealie-meal costs between $10 and $13. (I have seen the trench diggers around and about Harare)

I also spent a little time yesterday pricing some computer peripherals. An auxiliary keyboard which retails at R100.00 in South Africa, retails at $65 (R490) in Harare. A 250 gigabyte external hard drive retails in South Africa for R500.00. In Harare it retails for $250. (R1,875). I shall have to make another plan!

There are also several stories circulating that Jacob Zuma has been ‘tough’ with Mugabe and ZANU PF and some announcements are expected on Thursday (tomorrow) that will give evidence of this. In particular the recently promulgated Indigenisation Act is due for a major re-think. Hmmmmmm! I have grave doubts. While there may be some ‘announcements’ the evidence of the past shows that Mugabe and ZANU PF are terrified of losing face on anything significant and we have already heard many ‘no going back’ statements on the Indigenisation of Business. And then there is the lie factor: when it suits their power needs, there is vast difference between what Mugabe and ZANU PF says and what Mugabe and ZANU PF does.

Don’t believe that the economy in Zimbabwe is getting better. It isn’t. It’s getting worse.

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