The IMF and the mid-term review of Zimbabwe Finance Minister Tendai Biti incline to caution. Yet local companies are much more upbeat, according to an assessment from Imara Asset Management Zimbabwe, a subsidiary of the Pan-African Imara financial services group.
Imara has given a lead with investment facilitation into Zimbabwe and provides regular updates to international investors.
In his latest analysis, John Legat, Chief Executive of Imara Asset Management Zimbabwe, notes: We find it hard to understand why both the IMF and government are being as cautious as they are Their views give a rather sobering view of the economy rather than an upbeat and exciting outlook for a country barely in its second year of reform.
The IMF believes Zimbabwe has an economy worth just over US$5 billion, though it admits supporting data has serious shortcomings.
Legat thinks the IMF arithmetic does not add up and uses the neighbouring Zambian economy worth US$14 billion as a yardstick. The countries have populations of a similar size, but until its lost decade Zimbabwes economy was about 50% bigger.
Zimbabwes agriculture, tourism and manufacturing sectors gave it the edge over its copper-rich neighbour. By some measures, Zimbabwe still outdoes its neighbour.
Zambias two major breweries sold US$230 million worth of beverages last year while sales at Zimbabwes Delta brewery totalled US$324 million. In 2010 Zimbabwes Econet mobile phone service expects sales of about US$500 million while Zambians are expected to spend about US$280 million with Zain, their major network provider.
Significant Zimbabwean spending power is also indicated by food purchases from the Innscor fast foods business, Colcom, National Foods and the Spar retail chain. Imara estimates sales here at over US$1.1 billion a year.
Legat adds: According to the IMF and government, Zimbabwes gross national product per capita is US$450, which compares with Zambia at US$1,200 per head. Spending patterns in both countries suggest the opposite!
Zimbabwean exports also appear buoyant.
The governments mid-term review estimated the half-year value of platinum, ferrochrome and gold shipments at US$550 million, suggesting that full-year shipments would run to US$1.2 billion though Legat expects the figure to be higher.
He believes agricultural exports could top US$1 billion.
Excluding manufacturing and tourism, exports from agriculture and mining might top $2.3 billion or higher in 2010. Thats a bigger number than the IMF forecast that includes manufacturing exports.
Zimbabwes mid-term review indicated that half-yearly tax revenues were 12% above target, VAT receipts were 9% above budget and PAYE was 22% higher than projected. Corporation tax was 54% above target. Yet the mid-term review reduced governments economic growth forecast from 7% to 5.4% while the IMF revised its down to 2.2%.
We remain unconvinced. Says Legat, and further dont believe the underlying number used for the economy US$5 billion is correct.
Imara stands by its 2009 assessment that Zimbabwes formal economy is worth $8 billion to $10 billion.
That makes the current stock market capitalisation of $3.0 billion look very cheap The Zim economy is pumping!
Post published in: Economy