Address crucial issues first

HARARE - Zimbabwe's economic growth vis-a-vis the poor and deteriorating business environment appears to be a paradox. Despite averaging a GDP growth rate of 7, 3 percent per annum between 2009 to date — ranking the country among the fastest growing economies — the economy still remains in a quandary.

The country continues to rate poorly in terms of “ease of doing business”.

The economic fundamentals or factors which sank the country remain unchanged, raising the question if the growth is sustainable?

According to research on “Why Is One of the World’s Least-Free Economies Growing So Fast?” by the Kato Institute, the current growth rate is the result of unsustainable economic factors since the adoption of a multi-currency regime in 2009 that has created an artificially high growth rate.

This includes a 12-fold increase in government expenditures since 2008, with government deficits fed by enormous inflows of foreign grants and loans from the IMF, China, and Western countries (both on-and-off-budget).

Although the economy is being confronted by widespread growth inhibiting factors, chief among them the political and economic uncertainty challenges coupled with liquidity problems and shrinking industrial development base among others, the country has managed to defy all odds albeit for the short term. Political and business leaders should have hindsight.

Thus, until our government begins fixing internal problems of extraordinarily poor governance, insecure property rights, and dependence upon foreign aid and raw exports, the current high GDP growth rates are not a reliable indicator of our long-term prospects.

Analysts point out that for Zimbabwe to achieve a substantial economic recovery, the most key requirements include restoration of investment security, in order that substantial Foreign Direct Investment (FDI) is forthcoming.

In order that there is assurance of investment security, there must be political stability, founded upon genuinely free and fair elections.

The restoration of pronounced law and order, including containment of unauthorised land and other property acquisitions, and of the violence often associated therewith should stop forthwith.

There should be determined containment of unproductive governmental expenditures and pronounced curbing of corruption in the public and private sectors.

The watershed elections to be held during the course of the year may provide an opportunity to put the country’s guiding rules into better practice now that a constitution bill is now in place to be passed into law.

If Zimbabwe seizes that opportunity and respects the rule of law, good governance, and property rights at the forefront, it will have far more upside potential in the long-run, and far more of its population will benefit. - Staff Writer

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