HARARE – At nearly every public gathering, Zimbabweans have heard the same refrain from President Emmerson Mnangagwa: “Zimbabwe is open for business.”
But after three major companies told of the ruin wrought on their businesses by Zimbabwe’s power cuts lasting up to 18 hours daily, never has a slogan sounded so hollow.
Blamed by power utility ZESA on low water levels at Kariba, the dam that supplies the biggest hydro plant, the electricity cuts add more pressure on an economy hurt by a devastating drought and cyclone this year.
With formal jobs scarce – unemployment is over 80 percent – the informal sector and small businesses are the backbone of Zimbabwe’s economy, contributing 60 percent of the country’s US$21 billion gross domestic product, according to the International Monetary Fund.
Many small traders are struggling in a country where inflation soared to a new 10-year high of almost 176 percent in June, eroding incomes and savings. Large companies are not faring any better. Most have resorted to fuel-driven generators to power their businesses – but they say it is unsustainable in the long run, without raising prices of their products and services.
Norton-based Chinese tile manufacturer, Sunny Yi Feng, presented a perfect illustration of how the power cuts are affecting businesses in Zimbabwe on Wednesday.
“Power cuts occur here a lot, and we usually don’t have power all day starting from 5AM to 9PM. Our operations are all automatic and when there is a power cut, everything stops and there is also damage to equipment,” said the company’s director, William Gung.
“Our electric motors are the most affected. There has also been damage on 250,000 square metres of tiles. Once there is a power cut, the tiles become defective, not good quality. The defective tiles are worth about US$1,3 million.
“We need eight big generators to fire the whole factory. So, for the whole day, we need about 18,000 litres of diesel at a cost of ZW$100,000.”
This week, supermarket giants Pick n Pay and OK shut down their shops in the town of Rusape in Manicaland. Even though both have generators, diesel is in short supply.
Strive Masiyiwa, the founder of Zimbabwe’s biggest mobile phone and electronic payments solutions company revealed that telecoms operators need about 10 megawatts of power daily to keep their base stations working, and the networks operating optimally.
Last Saturday, when ZESA switched off power, Econet’s generators suddenly failed. They have been running for up to 18 hours daily in recent weeks – beyond their guaranteed capacity.
Zimbabweans who rely on Econet’s EcoCash platform to make payments found themselves unable to transact. Some who had queued all morning for scarce fuel discovered it was all a waste of time when they finally got to the pumps. For six hours, most Zimbabweans were incommunicado.
Econet says it does not have generators that can run for so long, and generate the kind of power it needs to guarantee quality services. “Our network was designed to withstand a set level of power outages and the highest such level has now been exceeded,” the company said.
“It is increasingly becoming untenable and uneconomical for Econet to guarantee a reasonable grade of service and optimal network uptime under the current conditions. With the ongoing aggressive ZESA load shedding, our requirements are at more than six times the diesel we are currently using in order to provide uninterrupted service,” the company added in a statement.
Surface Wilmar, the manufacturers of Pure Drop cooking oil, said they were scaling down operations because they could not bear the added cost of buying diesel to keep their machines running. The company is now operating at 15 percent of capacity.
“Why are we not disconnecting the Reserve Bank of Zimbabwe and the Ministry of Finance, and leave the productive sector?” asked Surface Wilmar executive chairman Narottan Somani during a meeting with industry deputy minister Raj Modi last week. “All those buildings have power, so they don’t realise the shortage of power. We are sending 300 people home everyday. Is it not painful?”
He maintains that Zimbabwe’s latest currency changes, including the decision to end dollarisation and re-introduce a local currency as the sole legal tender, had presented a pricing challenge. Finance Minister Mthuli Ncube is also out of touch, Somani said.
“Our oil has become unaffordable. At the interbank, the rate is 9. Our usual bottle of oil (2 litres) on the shelf used to be US$3.50. So if you multiply that with 9, it should be something like ZW$30. Even at ZW$23, ZW$24 there are no buyers because no salary has been adjusted to those levels,” he said.
“I was there at the Cresta Lodge where the Finance Minister said everything is hunky-dori, there’s no problem. So are we killing the GDP and ruining the economy on one side and saying that ‘I’ve $500 million of surplus?’ That $500 million is Zimbabwean dollars which is US$50 million. In an economy which we say is US$10 billion, if you have a surplus of US$50 million it’s nothing. Increase the salaries of civil servants nine times, and then show me a surplus. You will again have a deficit. So you are actually robbing the civil servant and showing us a surplus.”
Wilmar Surface CEO Sylvester Mangani says before Mnangagwa can convince foreign investors about the suitability of Zimbabwe as an investment destination, he must first convince local business.
“The feeling we’re getting is that this ‘Zimbabwe is open for business’ mantra is not addressing investors who are already there. We’ve tended to focus on investors who’re not coming but at the same time not looking after the ones who’re there,” said Mangani.
