The sense of insecurity and uncertainty has never been more foreboding. Talk of the Reserve Bank printing a new currency behind closed doors and in great secrecy and the President saying last week that the local currency would be back by the end of the year. The sudden withdrawal of the MDC from the transitional government and the subsequent negotiations, have all thrown the Zimbabwean population into the slough of despond.
Whatever the truth, the community fears a return to the situation that prevailed in 2008. Businessmen fear that they will wake up one morning and find their hard currency accounts converted to a new local currency that is basically worthless at a rate set by the Reserve Bank. They fear the imposition of restrictions on prices and a return to the harsh regime of the recent past.
The slow recovery in the banking system has evaporated, a run on the banks has put severe strain on cash flows and this is not helped by information that the Reserve Bank has been misappropriating the reserves of the commercial Banks. People are suddenly reverting to a strictly cash system.
The revelation that the Ministry of Youth and Empowerment has clandestinely drafted new regulations that would expropriate, without compensation, 51 per cent of the shareholding of all foreign firms with a capital value of more than $500 000 has simply halted all FDI activity. Firms that are already invested in Zimbabwe have frozen their operations here and those thinking about new investments have stopped all preparations and plans.
Without FDI there will be no significant recovery in the economy and no growth in the mining and tourism sectors - the only sectors that are likely to lead the recovery in the economy. Billions of dollars of new investment in both these sectors are now frozen and will not be invested unless the government moves to remove this uncertainty and to clarify what our intentions really are. The damage is so severe that it will take more that a few statements to remedy the problems.
The El Nino factor has suddenly intensified with the news that temperatures in the Pacific have risen by 1,5 C. and this suggests that we must anticipate a below average wet season. The early signs are not encouraging and after a series of good seasons including a near perfect season last year, we must expect a rough season. Even without the problems of a dry season, this year is going to be another disaster. Commercial farm production will be down even on last year. We are distributing small quantities of seed and fertilizer to 600 000 families in rural areas but this is scratching the surface of their needs.