Back to Index

This article participates on the following special index pages:

Weekly economic bulletin
Crisis in Zimbabwe Coalition
July 13, 2007

Download this document
- Word 97 version (49KB)
- Acrobat PDF version (215KB)
If you do not have the free Acrobat reader on your computer, download it from the Adobe website by clicking here.

1.0 Summary of economic highlights

a) The Zimbabwe Stock Exchange plummets

The majority of trading companies trading at the Zimbabwe Stock Exchange are feeling the blow of the interventionist policies by the government. The industrial index plunged by 20% on the 5th of June 2007. Retailers such as OK Zimbabwe failed to trade on the day as the organisation's share per unit crushed from ZWD $1 500 to ZWD $1000 by the closure of business yesterday. Econet also failed to trade any shares after the government slashed the telephone rates. The company's shares crushed from ZWD $245 000 to ZWD $180 000 per unit. Innscor Africa crushed from ZWD $ 70 000 to ZWD $ 25 000. Dairiboard Zimbabwe failed to trade as their share price crushed from ZWD $ 85 000 to ZWD $36 000 after the government imposed the new price ceilings on the industrialists. Of the 71 mainstream traders, only Seed Co recorded a positive transaction[1].

b) Retailers and manufacturers run out of commodities

The Weekly Economic Bulletin team this morning visited the majority of retail and manufacturing outlets and noted the pace at which basic commodities are fast disappearing from the shelves as consumers respond impulsively to price slashes by the government. The team predicts that the rate at which the market has panicked in response to the irrational price cuts by the government will give birth to food shortages before the end of this month, July 2007.

The price controls by the state are neither viable nor sustainable for the businesses to keep on producing goods and services. The price cuts were made indiscriminative of the costs of production for the organisations. Zimbabwe is regarded as one of the countries charging the most expensive interest rates on capital in the whole continent ranked in the same brackets with the likes of Iraq. If the government was concerned with the inflation regime prevailing in the country it could have applied scientific methodologies and tools to employ the most effective management of the inflation level noted below:

• Adoption of contractionary monetary and fiscal policies
• Reduction in government expenditure as a control of the annual budget difecits which has been an albatross on the neck of the government for the past quarter century.
• Boost foreign direct investment by improving investor confidence

In contrary, the militant approach to the macro-economic policies distorts the market mechanisms of demand and supply negatively. The intervention will discourage suppliers from producing as the goods will not recoup the cost of production and replenishment of stocks for the retailers and manufacturers respectively.

Download full document 

Visit the Crisis in Zimbabwe fact sheet

Please credit www.kubatana.net if you make use of material from this website. This work is licensed under a Creative Commons License unless stated otherwise.

TOP