Among the uncertainties facing Zimbabwe, the movements of exchange rates against the US dollar have become an additional problem, particularly for those sourcing inputs from South Africa. I have updated my exchange rate graphs to show the trends up to last Friday's rates and offer a few comments that I hope will be helpful. However, I have tried to dispel recently expressed thoughts that a return of the Zimbabwe dollar might take place sometime soon. Government’s indigenisation plans seem likely to push that event a long way beyond the current murky horizon as investor confidence suffers from the latest indigenisation attack.
Government is said to have been persuaded that amendments are needed in the Indigenisation legislation, but every possible effort must now be made to persuade government to repeal the entire Act. The country is in desperate need of expansion and development that depends on investment inflows. Plans that do no more than change the ownership of existing capacity will do nothing to help restore growth and the indigenisation achieved will be at considerable cost to the entire economy because the process will switch off new investment completely. If the Act is repealed, a new development plan can be built. If the Act is not repealed, our best efforts to accommodate it will still lead nowhere!
Kindest regards and best wishes,
John
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