AS 2010 Volume 17 Issue 2

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Browsing AS 2010 Volume 17 Issue 2 by Author "Moyo, Admire"

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    The impact of hyperinflation on the Zimbabwean construction industry
    (University of the Free State, 2010) Moyo, Admire; Crafford, Gerrit
    English: The purpose of this article is to indicate the effects of hyperinflation on the Zimbabwean construction industry. The latter, much like its successful regional and international counterparts, contributes towards the country’s gross domestic product, improving employment levels, economic growth, and restructuring the unfavourable balance of payment. In the last decade, however, this has not been the case in Zimbabwe as the country has grappled with severe hyperinflation that has led to the lack of a stable national currency accompanied by shortages of investors and labour which have resulted in the collapse of the construction industry. Regardless of other debatable causes of the crises the Zimbabwean government has labelled hyperinflation the country’s foremost enemy, the root cause of the construction industry crises. The article presents the findings of a Masters study whose primary objectives were to determine the cause of hyperinflation in Zimbabwe, investigate the relationship between hyperinflation and the collapse of the Zimbabwean construction industry, and determine whether hyperinflation is indeed responsible for the collapse of the Zimbabwean construction industry. The significant findings of the study (conducted at the peak of Zimbabwe’s hyperinflation) are as follows: the Zimbabwean government and the Reserve Bank of Zimbabwe arbitrarily printing money are the root cause of hyperinflation; hyperinflation has resulted in the lack of a stable national currency; investors and labour factors have led to business closures; stunted economic growth, and a collapsed construction industry. The article concludes that hyperinflation shares an inverse relationship with the construction industry; in other words, as hyperinflation increases, construction industry performance decreases up to a point where the industry collapses and vice versa. The article demonstrates how this phenomenon has led to the collapse of the Zimbabwean construction industry. The article recommends that the variables that are lacking in Zimbabwe be replenished as a precondition for the revival of the construction industry and that the merits of a stable socio-economic environment, a new government, dollarisation and an infrastructure stimulus package to address or counteract the effects of hyperinflation on the construction sector be investigated.