Zim Stock Markets Entangled in New Currency Challenges – The Zimbabwe Mail

HARARE – Listed Zimbabwean firms have expressed concerns over ongoing challenges in Zimbabwe’s economy, despite the introduction of the Zimbabwean Gold (ZiG) currency.

Companies such as Amalgamated Regional Trading (ART), OK Zimbabwe and Nampak have noted persistent issues like foreign currency shortages, unreliable power supply and infrastructural challenges, which continue to strain their operations.

ART highlighted that the broader economic challenges, including foreign currency instability, remain a significant obstacle.

“The operating environment continued to be plagued by a variety of challenges, among them foreign currency instability and unreliable power supply,” the company stated.

OK Zimbabwe echoed similar concerns, particularly regarding the shortage of foreign currency in the formal banking sector, which has led some stakeholders to insist on USD payments for products and services.

“The shortage of foreign currency in the formal banking sector continued to put pressure on the exchange rate,” the retailer noted.

Nampak also reported difficulties, pointing out that the El Nino-induced drought has adversely affected the agricultural season, adding to the economic strain.

The company faced power shortages, especially at their Ruwa plant, which disrupted operations and forced them to rely more on generators.

Despite these hurdles, Nampak managed to show some resilience, with overall volumes for the third quarter up by 2 percent compared to the previous year.

However, they acknowledged that “the economic environment continues to show signs of strain.”

CAFCA, a key player in the cable manufacturing industry, also warned about the ongoing negative impacts on infrastructure development due to the drought, decline in commodity prices and inadequate power generation.

“The impact of the drought, decline in commodity prices and inadequate power generational performance will continue to moderate infrastructure development in the period ahead,” the company cautioned.

However, amidst these challenges, companies have also recognised the positive impact of the ZiG currency on economic stability.

CAFCA reported that “the third quarter trading environment has been stable owing to the introduction of the ZiG and increased transactional use of the United States dollar.”

Hippo Valley, another significant player, emphasised the effectiveness of the 2024 monetary policy framework in taming inflation.

“The quarter under review was largely characterised by changes which came through the 2024 monetary policy framework,” the sugar producer noted, highlighting the initial exchange rate stability brought by the ZiG currency.

ART acknowledged that while challenges remain, the ZiG currency has brought relative stability to the market, leading to increased use and acceptance of the local currency.

OK Zimbabwe offered a more optimistic view, stating, “The introduction of the new Zimbabwe Gold currency (ZiG) brought with it a measure of stability,” which contributed to a significant decline in month-on-month inflation, from 57.48 percent in April 2024 to 0.0 percent by June 30, 2024.

Willdale, a leading construction materials supplier, also observed that “inflation stabilised in the quarter under review with month-on-month rates staying below 1 percent per month as confidence in the ZiG prevailed.”

Despite the ongoing challenges, the introduction of the ZiG currency has brought some stability to the economy, and companies are urging authorities to maintain this stability for a more positive economic future.

Source: Business Weekly