Zimbabwe’s Economy : Part 1 Sustainable & Renewable
energy
Zimbabwe has faced an unprecedented sequence of events in
the recent past years. The controversial land reform as well as hyperinflation
that few countries have had the misfortune of experiencing lead to a situation
where Zimbabwe now uses the US Dollar as its primary trading currency.
Given such a backdrop most investors would shy away and look
for other emerging markets to invest in which is the precise point that I wish
to differ with conventional investment views.
Let me explain it like this hyperinflation is indeed a
phenomenon that no one wants in an ideal scenario. This Hyperinflation that
occurred created an unusual incentive for investors to put their money in the stock
exchange in Zimbabwe. The reason investors did this was to hedge their money against
inflation. This had a startling effect the Zimbabwean stock exchange performed
so well and was the 3rd best performing stock exchange in Africa for
the year 2012.
Zimbabwe scored a year to date growth rate of 22.3% with an
average weekly trading volume in the range of $7.2m.The Zimbabwe Stock Exchange,
or ZSE, is the official stock exchange of Zimbabwe. It has been open to foreign
investment since 1993. Despite the shrinking of the economy since 2000, the
stock market inversely reacted to the factors that affected the economy
negatively. The ZSE was driven mainly by speculation as investors sought to
hedge against hyperinflation (Kosmas Njanike, 2009) .
The Zimbabwean government plans to demutualize the ZSE in
order to expose it to market forces in line with global trends.
Zimbabwe is starting to show the first signs of an economic
boom that could transform the country into one of the leading economic powers
on the African continent.
“After decades of economic mismanagement and chaos, the
country’s economy has been stabilized and an end has been put to the period of
ruinous hyperinflation. The introduction of the US dollar as the national
currency has in actuality eliminated the exchange rate risk and the conditions
for doing business are better than in many neighboring countries. The arguments
in favor of doing business in Zimbabwe include a high level of education and
training among the population, a relatively large domestic market with purchasing
power, natural resources and a good basic infrastructure that is still in place (SAFRI, 2013) .
The Zimbabwe economy has traditionally been based on
agriculture with tobacco being dominant. Other agricultural products are maize,
cotton, tobacco, wheat, coffee, sugarcane, peanuts; sheep, goats, pigs. Mining
has taken over as the main anchor of the economy with coal, gold, platinum,
copper, nickel, tin, diamonds, clay, numerous metallic and nonmetallic ores as
the main minerals (Deloitte, September 2012) .
The other industries that make up the economy are steel;
wood products, cement, chemicals, fertilizer, clothing and footwear, foodstuffs,
beverages. Due to the prolonged period of economic stagnation opportunities are
abound in Zimbabwe.
Zimbabwe’s rapid growth does put it in the recent company of
some other sub-Saharan African countries. An analysis by The Economist finds
that between 2001 and 2010, six of the world’s 10 fastest-growing economies
were in sub-Saharan Africa.
Dubbed the “Lion Kings,” these countries include Angola,
Chad, Ethiopia, Mozambique, Nigeria, and Rwanda. Over that decade, their annual
GDP growth averaged between 7,9 and 11,1% and by 2011 Zimbabwe was
out-performing all of them.
Sustainable Energy Pioneer
It is no secret that sustainable energy and alternative
energy is an industry for the future and in this regard Zimbabwe is a pioneer
in Africa. It may not look like the case now with political clouds hanging over
Zimbabwe but if you take a closer look at Zimbabwe you will observe that they
are spearheading in sustainable clean energy.
Global warming sentiment is something that developed nations
are trying to address the problem here is that their economies were built on fossil
fuels which has placed the bulk of their drive leveraged on this fact.
It may seem hard to understand for some but the truth is
that for developing nations there is a greater opportunity to base their growth
and development on sustainable energy sources in comparison to their developed counterparts
across the globe.
Ethanol has been successfully produced from sugarcane in
Zimbabwe over the past ten years whilst maintaining a favorable energy output
to input ratio of 1:1.9. It is shown that it is practicable to improve this
ratio to between 3.8 and 4.1 by operational changes such as maximizing ethanol
production during the cane crushing season and storing surplus bagasse for use
during the off crop season in place of coal which is presently used. Further
improvements are also possible by the introduction of more efficient boilers,
increasing surplus bagasse availability during the off crop season, and the
greater use of stillage as a fertilizer (A.D. Rosenschein, 1992) .
The rising cost of lead additives and of gasoline, and the
falling cost of ethanol and sugarcane, has created favorable economic
conditions for fuel-ethanol production. In Africa, where lead additives are
still heavily used and where sugarcane production is high, ethanol can be a
cheap source of octane. More than enough sugarcane is produced in Africa to
replace all the lead used in African gasoline; this would require Africa to produce
about 20% of amount of ethanol currently produced in Brazil, and would require
the shift of some sugar production to ethanol production. At a more modest
scale, African countries that could replace lead with ethanol using primarily
their by-product molasses production include Zimbabwe, Kenya, Egypt, Zaire,
Zambia, Sudan, Swaziland, and Mauritius (Valerie Thomas, November 2001) .
There is increasing interest in Zimbabwe in the use of
renewable energy sources as a means of meeting the country's energy
requirements. Biomass provides 47% of the gross energy consumption in Zimbabwe.
Energy can be derived from various forms of biomass using various available
conversion technologies. Crop residues constitute a large part of the biomass
available from the country's agriculture-based economy.
Currently, Zimbabwe has 70 MW of capacity for electricity
from sugarcane bagasse. In addition to bagasse, sugarcane processing also
produces molasses, which is used for the production of ethanol.
Bio Diesel Jatropha
Biodiesel has attracted considerable attention during the
past decade as a renewable, biodegradable and non-toxic fuel alternative to
fossil fuels. Biodiesel can be obtained from vegetable oils (both edible and
non-edible) and from animal fat. Jatropha curcas Linnaeus, a multipurpose
plant, contains high amount of oil in its seeds which can be converted to
biodiesel. J. curcas is probably the most highly promoted oilseed crop at
present in the world. The availability and sustainability of sufficient supplies
of less expensive feedstock in the form of vegetable oils, particularly J. curcas
and efficient processing technology to biodiesel will be crucial determinants
of delivering a competitive biodiesel. Oil contents, physicochemical
properties, fatty acid composition of J. curcas reported in literature are
provided in this review. The fuel properties of Jatropha biodiesel are
comparable to those of fossil diesel and confirm to the American and European
standards (Parawira, 2010) .
There is increasing interest in Zimbabwe in developing a
biofuels industry based on the production of biodiesel using Jatropha as the
main feedstock. This has led to the introduction of Jatropha as a commercial
energy crop in the country.
Due to its perceived benefits, the growing of the J. curcas
is shifting from small-scale farmers to tight-controlled corporate production
either on large plantations or through stringent contract production in India,
Burma, Saudi Arabia, Malaysia, Indonesia, Philippines, China, Ghana, South Africa,
Senegal, Nigeria, Tanzania, Ethiopia, Zambia and Zimbabwe among other
countries. Introducing an alien species at large scale in the environment, even
if it can potentially contribute to rural employment and poverty alleviation,
needs serious consideration. The claimed tolerance of J. curcas to pests and
diseases on few dispersed trees might not apply in general to trees in plantations.
Indeed Jatropha can grow in the semi-arid lands but may be without any
commercial yield being achieved. There is increasing evidence that seed yields
are sensitive to soil fertility and moisture availability (Parawira,
2010) .
Zimbabwe’s Jatropha biodiesel project remains in limbo amid
indications that the government is still carrying out tests to assess the
viability of the project five years since a plant was commissioned (NewsDay,
2013) .
In an apparent U-turn, Science and Technology minister
Heneri Dzinotyiwei said government had no immediate plans to produce fuel from
the jatropha plant on a commercial scale. He added that there has been misconception on the
production of Jatropha fuel on a commercial scale.
Dzinotyiwei said nowhere in the world is Jatropha produced
at a large scale.
“I cannot quantify the output from Mutoko as it is for
experimental purposes. But the vehicles at the plant use bio-diesel from
Jatropha as fuel. We had misconceptions when the project was launched there is
nowhere in the world where Jatropha is produced for commercial purposes,” he
said. Dzinotyiwei said there was need to allocate more land to the project for
the production of soya beans. “We are not producing significantly may be we
have not come up with a dedicated project to grow the relevant crops,” he said.
Dzinotyiwei said the plant in Mt Hampden that is owned by the central bank and
private players was being maintained as oil that is required for the plant to
be up and running was not available. “They are supposed to produce bio diesel,
but they need oil from soya bean. They cannot get sufficient amount of oil.
They are more or less maintaining it. If we had oil from Jatropha, that plant
is a perfect plant, it’s just that the feed stock is in short supply,” he said.
He said the country has enormous opportunities for bio-fuels and he cited the
ethanol project which he said was a well proven project commercially. Dzinotyiwei
said the ethanol project problems have nothing to do with scientific merits,
but business merits (NewsDay, 2013) .
In Zimbabwe, Environment Africa and WWF did a study on
jatropha production at household level and found that it was economically
viable even if yields were as low as .5kg per hectare when jatropha cake along
with other byproducts and household lighting were the aim. When the model was
to sell the seeds to crushers for biodiesel production, the benefits didn’t
work out for communities.
Government and industry studies project that biodiesel can
potentially contribute 30 percent of Zimbabwe’s fuel needs. Also, biofuel production
will develop sustainable energy,
industry, and agriculture. The crops have helped to reduce poverty levels
and improve rural employment, creating
thousands of jobs in Zimbabwe and across Africa. Without standards to help determine that the
biodiesel from Jatropha performs as desired, this new sustainable industry
would likely be impossible (standardslearn, 2010) .
Bibliography
A.D. Rosenschein, D. H. (1992). Energy analysis of
ethanol production from sugarcane in Zimbabwe. Biomass and Bioenergy,
Volume 1, Issue 4, 1991, Pages 241–246.
Deloitte. (September 2012). Investing in
Zimbabwe. Amsterdam, Netherlands: Deloitte.
Kosmas Njanike, P. K. (2009). Factors Influencing
the Zimbabwe Stock Exchange Performance. Annals of the University of
Petrosani, Economics, vol. 9, issue 2, pages 161-172.
NewsDay. (2013, May 9). Jatropha project still at
experimental stage: Govt. Retrieved June 6, 2013, from
http://www.newsday.co.zw/:
http://www.newsday.co.zw/2013/05/09/jatropha-project-still-at-experimental-stage-govt/
Parawira, W. (2010). Biodiesel production from
Jatropha curcas: A review. Scientific Research and Essays Kigali Institute
of Science and Technology (KIST), Vol. 5(14), pp. 1796-1808.
SAFRI. (2013). Zimbabwe: Economic Boom. Southern
Africa Initiative of German Business - SAFRI, 1-6.
standardslearn. (2010). Zimbabwe’s Search for a
Sustainable Energy Source. Retrieved June 6, 2013, from Zimbabwe’s Search
for a Sustainable Energy Source:
http://www.standardslearn.org/documents/Zimbabwe_Jatropha_2.pdf
Valerie Thomas, A. K. (November 2001). Ethanol as a
lead replacement: phasing out leaded gasoline in Africa. Energy Policy,
Volume 29, Issue 13 Pages 1133–1143.
Posts
