Zimbabwe’s information technology sector is at a cross- roads where it faces possible collapse due to the acute shortage of foreign currency and the excessive loss of skilled manpower spawned by the acute economic recession.

Major players in the industry told The Financial Gazette this week that the Industry, touted as the fastest growing sector prior to 1997 had been weighed down by the excessive costs of importing products into Zimbabwe against the background of shrinking disposable incomes.

This comes at a time when the once robust agriculture-driven economy has virtually given up on securing offshore lines of credit due to the worsening country risk profile. Companies have also cut back on capital expenditure despite the compelling need to invest in information technology.

"The other problem the computer industry is facing is the loss of qualified professionals. Qualified computer professionals are leaving the country and it will be very difficult to attract them back.

"We cannot compete with some of our neighbouring countries in terms of salaries because our currency is absolutely vulnerable and as a result our professionals go for greener pastures abroad," said Gary Ballard, the chairman of the Computer Suppliers Association of Zimbabwe.

"The exchange rate and the fact that we buy computers and computer spares abroad has also contributed to the high computer prices." Before the "black Friday" of November 1997, which marked a turning point in Zimbabwe’s economic fortunes, the information technology sector appeared headed for a boom. Six years later, it now anchors the bottom of the ladder after investors turned their backs on Zimbabwe at the height of violent land seizures.

Maxwell Mabika, a director at Innovative Computers and Networks, said the industry was not getting foreign exchange on the formal market, hence companies were surviving on buying expensive foreign exchange on the parallel market. A number of companies have closed shop as a result and the remaining ones are virtually operating on survival mode.

Compulink managing director Max Gwangwadza said the hyperinflationary environment and the requirement that exporters retain part of their earnings at the official exchange rate has made the industry less competitive. "We are forced to remit about 50 percent of our earnings to the government, which drastically affects the way we operate, the way we pay our employees and ultimately the price tags of our computers," he said.

Financial Gazette