It is official. Zimbabwe’s economy is definitely on a recovery path. One doesn’t need to look far to find the proof.
• An improved tax revenue collection by central government. $200m more collected than was previously budgeted.
• Dramatic shift in tax revenue structure. VAT now contributing more than 36% to total revenue collected.
• There has been a rise in deposits in the banking sector. June – $1.8bn – driven by increased tobacco, gold and diamond sales.
• National Milk production is up 30% compared to June 2009. The country is now producing 3.7m litres of milk per month.
• Volumes are on the increase in many companies that have released results. Zimplow, Delta and Dairibord have so far seen an increase in volumes of between 30 and 50%
• Barclays bank recorded an operating income of nearly $20m in the sixth months to June 2010, double that recorded for the whole 12 months in 2009.
• Gold mines continue to acquire and develop new mines. To date 4000kgs of gold have been produced, same as what was produced in 12 months last year.
Although we are yet to hear of big factories opening up we are certainly in no doubt that the economy is not in decline anymore. One thing that makes it difficult for any economist or analyst in this part of the world is the lack of firm and reliable data. We cannot talk about job numbers, productivity indices etc. Here a lot of emphasis is placed on the Consumer Price Index (CPI) popularly known as inflation. It too slowed down from 6.1% to 5.3% in June 2010.
Other measures that gauge the level of productivity and business confidence are simply not relied on because the information is unavailable. One might ask why I think the above points that I listed lead me to conclude that the economy is recovering. Call it a sixth sense I think Zimbabwe will surprise us all. After all this is real money we are talking about! At the end of day what we are seeing points to the fact that there has been an improvement in economic fundamentals.
At a micro-level there is more evidence to support my assertions. Dairibord -http://www.dairibord.com/dairibordzimbabwe/, a company involved in food and beverages sector has seen increases in volumes of more than 30% in the first 6 months of 2010. PAT for June 2010 was $2.9m. DZL normally enjoys a better second half so we should expect some good numbers for the full year. At 7.3cents, a market capitalization of $25m, DZL is cheap.
Developments on the stock market since the beginning of the second quarter of 2010 have hardly mirrored this positive story that is showing in the economy. I find this disturbing because it means that negative perception is overriding the good story that is building up for Zimbabwean investments.
What is reassuring though is that hardly a day passes without a few big deals being conducted on the stock market, a sure sign that some investors are looking past the doom and gloom.
Over the past week there has been an accumulation of a number of shares in Delta, Ariston, African Sun, Dawn, Pearl, Mash among others. Although share prices have not reacted to this renewed buying interest, buyers are slowly coming back to the market. They seem to be looking for bargains and they are getting them indeed! The whole ZSE has a market capitalization of $3.3bn.
