0
0
By Calvin Manika
IN the past decades’ conflict in Africa has seen people flocking into Zimbabwe as refugees. Interestedly, some of the refugees from countries such as DRC and Sudan have managed to establish businesses and investments which are successful. In a similar way, entrepreneurs from West Africa are running businesses, a feat most of the locals are failing under adverse economic conditions.
The local investments by foreign nationals come as a lesson especially with the current obtaining situation in Ukraine. Leroy Shoriwa, a Harare based economist said Russia – Ukraine conflict has a double effect on Zimbabwean entrepreneurs.
“Firstly, Ukraine is a major producer of products such as wheat and other supplies and its shortage on the market is a challenge to Zimbabweans given that it is one of our major suppliers. Secondly, some of the Ukrainian refugees can find their ways and come to Zimbabwe and like before, they will establish businesses in the face of the declining Zimbabwe’s economy to the discomfort of many failing Zimbabweans.
“But, besides threats in local business space, I see it as an opportunity for Zimbabweans to start producing locally many products especially the young entrepreneurs. We don’t want to just import critical products, but to be seen also exporting to other countries. We want a positive balance of payments,” Shoriwa added.
On February 24 Russia launched a full-scale invasion into Ukraine and to date over 1,2 million people have fled the country. Most of the people are fleeing to neighbouring countries and to Western Europe. This gives an opportunity to some to come in Africa and Zimbabwe to invest or start a family business.
Between Russia and Ukraine, Zimbabwe is a longtime ally of the former with a relationship which dates back in 1970s during the days of Zimbabwe guerilla warfare. Russia assisted Zimbabwe with weaponry and training of its troops in the then Soviet Union. The relationship was also strengthened when Zimbabwe was given sanctions by the western countries. On 2 march Zimbabwe was part of the 15 African nations that abstained to vote on the United Resolution on the Russia – Ukraine invasion citing that the situation in Ukraine was complicated.
Zimbabwe depends on Eastern nations including Russia and Belarus for trade and gets at least half of its wheat from Russia. But the war is affecting commodities beyond wheat and fuel. Both Russia and Ukraine exports about a quarter of the world’s wheat. The war between the two countries made prices to shoot up globally since February.
A local businessman Tamuka Majoni noted that, since the beginning of the conflict wheat prices raised with nearly 15 percent from 119,000 Zimbabwe dollars ($595) to 136,544 Zimbabwe dollars ($682) per metric tonne.
“To avoid disruption of bread supply to the consumers’ local bread producers in Zimbabwe had to increase the prices. It is a challenging hour to entrepreneurs, because they need think outside the box and take this as an opportunity to find alternative supplies and maintain prices to gain confidence in their markets and make profits. Many entrepreneurs are investing in bakeries and here comes the war between the biggest suppliers of the raw materials in bakeries. There is need to close the gap to avoid shortages,” Majoni said.
Besides fuel, Zimbabwe also imports oil. The war’s ripple effects are hitting the southern Africa country hard as supplies of fuel, food are disrupted. Fuel is increasing its prices every month. But since the conflict begun, the Zimbabwe Energy Regulatory Authority (ZERA) has increased fuel prices sharply and sometimes on weekly basis citing the war in Eastern Europe as the major cause.
“Goods have increased prices from wholesale to retail. This is an indicator over dependency on imports of essential goods such as fuel. Fuel affects the whole distribution network of goods because costs will rise and this affects the consumer though it can be a small margin,” said Martin Sundura, a local dealer.
According to the Ministry of Finance and Economic Development, the average annual inflation in Zimbabwe is projected to fall from a high of 94.6 percent in 2021, to 32.6 percent in 2022 and 17.5 percent in 2023. Leroy Shoriwa said, both the World Bank and the government have projected a growth of more than five percent.
“Such predictions are important for investors and any entrepreneur. It is such economic indicators which may attracts some of the Ukrainian refugees and come to invest here, taking the space of the locals who are struggling with working capital or taxes. And most importantly, Zimbabwe is peaceful compared to other African countries with viable economies. That itself attracts investments especially by people coming from war conflict zones,” Shoriwa said.
The Reserve Bank of Zimbabwe said rising oil, gas and fertilizer prices were inevitably having a negative impact on production costs and destabilizing the foreign exchange market. This was confirmed also by the Finance Minister Mthuli Ncube who said the Russian-Ukraine conflict is severely disrupting the country’s and global supply chains.
“Costs of importing raw materials has been rising since last year. So, we are importing inflation and that’s a tough spot for any economy to be in. It is never easy to control and ameliorate the impacts of imported inflation,” Ncube said.
Economic experts highlighted that the war is affecting businesses and will continue for a foreseeable future and is putting at risk global supplies of products like minerals, sunflower oil, and wheat.
“Some of the global developments include increases in the international prices of oil, gas, fertilizer and cooking crude oil, products of which Russia and Ukraine are major producers,” RBZ governor John Mangudya said.
According to COMTRADE, a United Nations database on international trade, in 2020 Zimbabwe import bill was US$12,46 million from Russia which include fertilizers, medical apparatus among other products. In 2021 it was US$14,21 million from Ukraine which include food and industrial products.
Experts are of the view that, despite various financial threats and market risks, this an opportunity for local entrepreneurs to explore new avenues, embrace local productions and partnerships in the manufacturing of essential products.
