Staff Reporter

Zimbabwe has strong foundations for accelerating future economic growth and improving living standards. The economy has excellent human capital, comparable to that of upper-middle-income economies in Sub-Saharan Africa, although some skill shortages are emerging in some sectors. Moreover, Zimbabwe possesses abundant mineral and natural resources that, if well managed, can support the country’s development objectives. However, for the past decade, the Zimbabwean economy has been experiencing dynamic challenges, internal and external.

Zimbabwe’s economic development continues to be hampered by price and exchange rate instability, misallocation of productive resources, high informality, low investment, and limited structural transformation. Economic growth has been volatile over the past decade. High inflation, multiple exchange rates, and unsustainable debt levels have increased the cost of production, reduced incentives for productivity-enhancing investment, and encouraged informality. Trade integration has declined, and foreign direct investment remains low, limiting the transfer of new technologies and investment in modernizing the economy.

CEO Africa Roundtable held an Executive Breakfast aimed at unpacking the causes of the currency crisis in the country. Chief amongst the causes is the imbalance between politics and economics, which have seen the Government doing the same things and expecting different results. In this regard, accountability and transparency issues are questionable which often result in the persistent blame game between the Government and the private sector. The country has also been experiencing fiscal deficits and such fiscal gap was complemented by quasi-fiscal activities which are being financed through money printing as highlighted by money supply growth of over 400% in the past financial year. The end result has been erosion of value of local currency and other aspects such as pensions. Therefore, the major recommendation from the Executive Breakfast to curtail the inflationary environment and the exchange rate volatility is to re-dollarize in the short term and develop mechanisms, such as floating the local currency, for stabilizing the dual currency in the long run.