|When things seem to be getting into place, when all gears seem to have been engaged, one cog slips away and reverses either all or part of the gains made, this is the rollercoaster ride the Zimbabwean economy has been taking since 2018.|
The national power provider Zimbabwe Electricity Transmission and Distribution Company (ZETDC), started implementing countrywide 12-hour load shedding due to generation issues and limited imports, according to a statement they put out.
ZETDC released a load shedding schedule on Sunday, confirming the country is experiencing a power shortfall due to generation constraints at the thermal power station Hwange, which is almost 40 years old. In addition, maintenance work on the dam wall at the hydropower station Kariba requires two generators to be offline daily for 12 hours.
Power cuts had now been a thing of the past despite a few breakdowns which were swiftly repaired in a day or two, and not enough to disrupt industry. Now the nation is experiencing darkness for longer hours, as much as 12 hours.
This has pushed industry to cut back on production hours and close some shifts due to unavailability of electricity, which is an essential part of production. As a result all the gains that have been made in stabilising the economy through inflation targeting, are simply eroded.
At a time when consumers are having more buying power relative to the past two to three years and industry is striving to meet demand and reduce exports, loadshedding returns and muddle all the efforts.
At the beginning of the year we saw problems with gold deliveries, which is one of our major exports, due to payment issues with Fidelity Printers and Refiners (FPR). This saw the country losing millions of dollars to smuggling as deliveries to the FPR hit an all time low in the first quarter. In July, the problem had been rectified, much to the joy of small scale miners whom have since out delivered themselves every month since then.
During that period, the foreign currency auction was beginning to see it’s own problems with disbursement of allotted funds, with some companies complaining that they have not yet received funds allotted as back as four weeks. The apex bank, the Reserve Bank of Zimbabwe (RBZ) recently admitted through it’s Monetary Policy Committee that the auction was in arrears as much as US$175 million.
As the RBZ is trying to fix such problems, the country wakes up to non functioning generators at Hwange and long hours power cuts are back.
It is such perennial problems that do reverse the gains of the economy in small parts but in a big way as a whole. These are problems we should be saying we’re in the past and we’re fixed, resulting in consistency in production and moving the economy forward.
This year we were fortunate to have a bumper harvest which has led us to reduce imports of grain heavily freeing our fiscus, but these power problems now seek us to increase imports of energy from neighbouring countries, spending the foreign currency which should have been used to better the economy.
The economy is but a sum of its parts, and this derails the export drive we have recently seen as a nation in 2021. Gold exports were low in the first quarter, production dipped due to ballooning debt with raw material suppliers as a result of foreign currency backlogs and now it has been plagued by both foreign currency backlogs and long hours of loadshedding. Such problems might lead to the country missing it’s growth and current account targets come the close of the year.
As a nation in order to move forward and keep the momentum going, we should not seek for short term solutions but for solutions that have a lasting fix, that allows industry to recapitalise, produce and recover – Harare