Powerspeed in scathing assessment of economy

Powerspeed Electrical, which delisted from the Zimbabwe Stock Exchange, saying the bourse was no longer fit for purpose, has this time made a scathing assessment of the country’s economic environment.

Powerspeed, which runs 20 branches across the country, delisted from the stock exchange late last year.

At the time of delisting, Powerspeed, which sees itself as the leading supplier of electrical, hardware, building and home improvement products and services; said in the current environment its listing on the ZSE has very little benefit and considerable costs.

It added that the lack of capital from institutional investors means that the listing has limited value in terms of a mechanism to raise capital and ongoing legal, compliance, and audit costs impede shareholder returns.

“In the face of a difficult trading environment the additional costs of being listed, with no compensating benefits, can no longer be borne by the company,” reads part of its circular to shareholders explaining the delisting decision.

With the delisting now done and dusted, the company, which is chaired by Simba Makoni, has once again given a scathing assessment of the country’s economic environment.

It said while authorities have been painting a rosy picture of the economy, there was no evidence on the ground.

The Government, through the ministry of finance and the central bank, is on record saying the economic environment has greatly improved.

The exchange rate, which has stayed between 81 and just above 83 for more than 5 months is seen by authorities as a success story.

Inflation, which has since come down from a peak of 837 percent in July last year, to 362 percent as of January 2020 is another major highlight touted by the Government.

Probably looking at the parallel market exchange rate, now at a premium of between 35 and 40 percent, and inflation, which went up in January both month-on-month and year-on-year, Powerspeed says it is difficult to tell “where our country is going”.

“We hear from our leaders, many promises of reforms and a prosperous future. However, there seems to be little evidence of sustainable economic and social improvement anywhere,” reads part of the Company’s 2020 Annual Report released this week.

It added that the country needs a coherent, credible macroeconomic policy framework, and regulatory regime, within which the economy can operate, “so that we can plan for the future”.

Interestingly, the comment comes as the Government recently launched several economic policies including the National Development Strategy 1.

While Reserve Bank of Zimbabwe governor Dr John Mangudya is on recording saying that he is happy with the developments in the monetary sector, Powerspeed seem not convinced.

“The myriad of problems facing the monetary and financial sector in Zimbabwe, has rendered traditional ways of saving money worthless,” reads part of the 2020 Annual Report.

The RBZ itself is offering a 5 percent interest on a savings bond used to mop up liquidity from the market.

Banks are offering 13 percent interest on short term (90 days) deposits.

This, however, seems to be a blessing in disguise for the company as “people opt to put any spare disposable incomes into their homes”.

“In turn, we strive to support the people’s value preservation instincts, by offering a broad range of good quality, value for money home improvement products,” it said.

The company opened its twentieth branch in Bulawayo during November last year.

“This addition raises our total retail floor space to 13 958 square metres.”–ebusinessweekly.co.zw