TRADING at the Zimbabwe Stock Exchange (ZSE) sunk to a new low record this week with a whole day’s trade accounting for only US$105 on Wednesday.
This was the worst day for the stock market since Zimbabwe officially adopted the US dollar as its preferred currency in 2009. The Zimbabwe dollar was abandoned that year when it became worthless after several years of hyperinflation.
According to Zimbabwe’s online financial publication, The Source, even the few remaining foreign investors who had “carried” the market through its bad times are now abandoning Zimbabwe, in particular over the last year.
ZSE chief executive Alban Chirume said he saw no recovery ahead and cost cutting measures, including redundancies, were on the cards. The Zimbabwe business community is speculating about whether Zimbabwe’s Stock Exchange could survive.
Despite lack of foreign investor confidence, Deputy President Emmerson Mnangagwa said the state would soon launch a US$500 million maize project on 400 hectares of land, and that most of the crop would be irrigated.
Mnangagwa, himself a successful maize farmer, did not disclose where the money to finance this “command” maize project would come from.
He told local journalists that Zimbabwe would attempt to become self sufficient in maize again.
“This is a national programme and as such the public, private sector and farmers must come together and cooperate in the funding. On the cost, we are negotiating lines of credit and we cannot disclose those we are negotiating with.”
Zimbabwe was a regular maize exporter before the government began to seize commercial white farms in 2000.
Finance minister Patrick Chinamasa says he is confident he will raise a US$2 billion loan to repay Zimbabwe’s debt to the International Monetary Fund, (IMF), the World Bank and the African Development Bank.
If he succeeds in raising loans to pay off these debts, Chinamasa says that Zimbabwe will then be eligible for new loans from the IMF.
Zimbabwe has committed to certain reforms, in particular, significant reduction of the size of the civil service which consumes more then 80 percent of government revenue.
The IMF cut Zimbabwe off in 1999 after it failed to pay back its loan.