Firstly there seems to be a lot of vibrancy in the retail sector compared to last year. This is attributable to the fact that shops are a lot better stocked compared to 2009. Immediately after the introduction of multiple currencies, prices remained high in hard currency terms as many retailers had not got rid of the profiteering bug and were also trying to recover from hyper-inflation. In 2010, competition, availability of goods and perhaps a better understanding of the true value of the US Dollar has driven prices down. Added to that is the fact that in many companies, salaries have risen in real terms. This in my opinion is driving the activity in the retail sector.
You have to say that on the whole you get the sense that people are spending more freely than before. I noticed that Innscor is opening or has opened foodcourts in places like Marondera, Masvingo, Chinhoyi, Beitbridge, Chegutu where none existed before. Shows that even on a corporate level, there is greater confidence which shows the benefit of a low inflation environment on business expansion plans
Of concern however is that probably 80% of the goods on the shelves are South African manufactured. Suggesting that the activity in the retail sector is not translating to greater production in the manufacturing and value add sector and job creation.
Certainly for employees in the NGO Sector, the blue chip companies and even part of the banking sector I saw evidence of real incomes and standards of living increase. You can just tell by some of the food people serve you when you go to their houses. But these are just pockets of prosperity.
The average age of the cars on the roads has improved. I saw many late model pick ups and twin cabs of the middle price range. I am told that this a legacy of the diamond dealing, currency burning and hyper-inflation era where people needed to find a home for their money outside the more formal financial inter-mediation channels. As well as duty exemptions on certain types of vehicle which were in place about a year ago. This explanation probably makes sense given the lack of liquidity in banks at the moment. I am sure some companies are contributing to this by buying vehicles for their managers. I saw many vehicle dealerships full of stock, especially ex-Japanese imports. I am not sure how fast that stock is moving. Certainly pick-ups and 4×4’s appear more in vogue among those able to afford brand new cars. There are very few un-interupted stretches of road on which one can genuinely enjoy the comfort and speed offered by a low clearance luxury sedan as I found out myself.
But what is staggering is the extent to which the economy has informalised. Some people think this is a good thing. But there is a difference between the growth in SME’s as we have seen in the fast growing Asian economies and the Zimbabwe situation. Zimbabwe’s informal sector by and large involves petty trading, with no value creation in the economic chain. Our informal sector exists on a subsistence level, meaning that whatever surpluses are produced go towards the consumption and survival needs of the informal trader and his family. So basically our informal traders are like a different form of subsistence farmer. Very little of the proceeds of this informal trade flows through the financial system (does not create lending capacity and liquidity in banks). And there is minimal contribution to the fiscus.
Our informal sector is not based on entrepreneurship in the form of development of new products or processes but simply by the need to survive on the part of people who are unable to find jobs. Clearly this sector has a social benefit in that it has prevented mass starvation and hopelessness, but it will never be an engine for sustainable economic growth, development and modernisation in its current form.
This is indirectly related to the next issue I will comment on, which is infrastructure. There are definitely some pluses. Particularly in telecommunications. The investment made by the likes of Econet are delivering benefits in terms of more diverse technology offerings (internet bundles on the cellphone, broadband etc, etc). It was nice being able to buy a prepaid line at Beitbridge for $1.
But the developments in the telecoms sector are definitely outweighted by the crumbling state of the country overall. Highways like Beitbridge-Harare are the nations artery. And its disheartening when you hear that tolls collected on this road are being diverted to road upgrades in Zvimba and Shamva. Why cant those road users pay their own tolls? The negative impact of that has been the migration of many of the massive haulage trucks to the Harare-Gweru-Mvuma route as a way of avoiding the Harare-Chivhu-Mvuma route which is now dilapidated. The effect of this is that the dilapidation of the Harare-Masvingo route is slowly being transfered to the Harare-Bulawayo route. I managed to spend a bit of time besides Harare in Mutare and Bulawayo. If you think the highways are bad, the situation in surburban roads in major cities is worse. In certain posh parts of Mutare they are no longer talking about potholes – rather whole chunks of tar have disappeared with the roads becoming slowly converted to dust roads.
In Harare street lights are non existent. In the past on entering Harare from the countryside you could see the lights from like 40km away. These days anyone travelling to Harare for the first time would not know that they have actually arrived in a big city. Its pitch dark. Buildings and public ammenities are poorly maintained. I found the state of Avondale Shopping Centre shocking. I was impressed with Joina Centre though, although there is still a lot of unoccupied floor space.
And just the filth!! Garbage everywhere. And certainly flies are becoming a problem as a result. Buildings are in bad shape and poorly maintained
Parts of Masvingo town resemble a growth point what with uncontrolled vending, disappering tarmac and idle people milling all over the place. The only thing missing is goats and chickens running all over the place otherwise you could be in Mpandawana.
In terms of people’s mindsets, I am a bit worried that people both at an individual level and a corporate level have become so used to mediocrity and third rate stuff that it is becoming difficult for people to be motivated to strive for better. There is still a living for today mindset. Some business executives I spoke to have been so isolated from what best practice is that it will take time for Zimbabwean businesses to be trully competitive internationally. Business has become so inward looking. The momentum we need will have to come from businesses with international parents and strategic partners. Or alternatively it will need some internationally exposed and far-sighted indigenous entrepreneurs to make a difference
On a more personal note, I was a bit taken a back by the way Zimbabweans take so little care regarding their personal appearance. Is that people are so beaten down with trying to survive that they dont care how they look? Surely in the city you expect people to be a bit trendy?? Women with poorly maintained weaves (with the natural hair sticking out)and wigs perched haphazadly on top of their heads. And ill fitting blouses and skirts that dont appear to have any connection with body shape. No evidence of proper skin care. Then the men. You go to some of the bars and hang out places and its like anything goes. Shorts? Slippers? Ill fitting T-Shirts with holes in them? Cats looking like they had not seen soap and water for a few days? And this was in the city centre and the surburbs. Hameno.
So what is my take overall? I would say there is a marked improvement at the individual micro-economic level on average. But that is more due to the migration from hyper-inflation to stable currency and the structural adjustment that this entails and is less to do with any real foward momentum in the economy. For any improvement to be sustained, we need to see real economic activity coming through in the form of factories reopened, mines producing and FDI coming in. We need to see lines of credit in the banking sector. Some of this has started but nowhere near the scale the country needs to see.
Rather than to say things have improved in Zimbabwe, I think its more accurate to say they have bottomed out i.e stopped getting worse. There is a lot more work needed before we can talk of improvement