Mugabe win disastrous: Economists

HARARE - With less than 24 hours left for Zimbabweans to vote in a make-or-break election, economists say the country’s economy will decelerate further if President Robert Mugabe wins.

Zimbabwe’s economy – still suffering a hangover from a decade-long recession – relatively stabilised and registered growth following the formation of a coalition government in 2009.

In the July 31 poll, 89-year-old Mugabe squares off long-time rival Prime Minister Morgan Tsvangirai, with a survey by United States-based Williams and Associates of Salem predicting that 61 percent of the voters favoured the latter.

Both Mugabe and Tsvangirai’s campaign manifestos have hinged on economic revival with Zanu PF promising to indigenise more foreign-owned firms and unlock nearly $2 trillion in minerals value while MDC says it will create a million jobs in five years’ time among other assurances.

Christopher Mugaga, an independent economist, said 2013 is bound to see Zimbabwe’s economic prospects wane “if there is no political resolution which identifies a legitimate regime.”

He said political risk will be a major negative factor if Mugabe wins as his Zanu PF party “will remain intransigent to the demands of attracting foreign direct investments (FDI) as long as the so-called sanctions are still in place.”

Mugaga said the baseline scenario of Zanu PF still holding onto power and consolidating its stay will see Gross Domestic Product (GDP) annual growth progressing at less than 1,2 percent.

“The last 152 days of 2013 are expected to be characterised by a protracted political calendar which will impose a negative threat to the prospects of Zimbabwe’s economy,” said Mugaga.

“A weaker business environment will ensue which will see the absence of growth oriented reforms,” he said, adding that the “slow pace of growth in Zimbabwe’s mining sector will worsen” and see capacity utilisation diminish.

This comes as Finance minister Tendai Biti last week revised downwards Zimbabwe’s 2013 economic growth target to 3,4 percent from five percent.

Biti said developments in the first half of the year “indicate evidence of stagnation, particularly through under-performance in the key sectors of agriculture and mining.”

Last year, the Treasury chief revised downwards the economic growth targets twice from an initial projection of 9, 6 percent to 5,6 percent and then to 4,3 percent.

Mugaga further said Zanu PF’s indigenisation policy, compelling foreign firms to cede at least 51 percent shareholding to black locals, “promoted expropriating wealth ahead of creating it” and  will
“continue posing a threat to already dilapidating infrastructure.”

“No rational international investor is willing to cede 51 percent of their business when most countries in Africa are opening doors to foreign investors with relaxed trading policies knowing well that international capital flows are so limited of late,” he said.

Mugaga, however, said in his view, an alternative scenario where Tsvangirai wrestles power from Mugabe will see “the government of the day implementing strong policy measures to address existing impediments to sustainable growth.”

“This is a scenario where the $10,7 billion debt will decline due to improved relations with Bretton Woods institutions and Zimbabwe returning to its pre-1998 levels by the end of 2018,” he said.

“Tsvangirai’s government is expected to take into consideration the concerns of foreign investors in the implementation of the indigenisation policy and he might bring sanity to the financial services sector,” Mugaga added.

He said the development could potentially boost GDP growth by about four  and five percentage points relative to the baseline scenario over the medium term.

“The current account deficit would decrease to around 13 percent of GDP by 2019, largely financed by FDI inflows,” Mugaga said.

He also noted it is quite impossible to have a winning party which will take all.

“The possibility of a second coalition government is even much higher than in 2008 given the strides both political parties had made which can hardly separate them,” he said, adding that another runoff is highly possibly than any other outcome.

Renowned economist John Robertson said: “These two political parties have got totally different policies. If you look at it, MDC has got respect for property rights whereas Zanu PF is bent on expropriation measures.”

He said Zanu PF, which has led Zimbabwe’s economy for the past 33 years, enforced policies that will “indeed bleed the economy” and “discouraged investors”.

“We need restoration of the rule of law, including inhibition of unauthorised land and other property acquisitions,” Robertson said, adding that Zanu PF’s empowerment policy was benefiting a few.

“MDC’s prospects of reviving ailing companies thereby creating jobs is the best form of empowerment. Certainly they will prioritise attracting foreign direct investment which is a prerequisite for any country seriously looking at economic growth.”

“The MDC will indeed encourage reconciliation with the international community, concurrently with pursuit of trade opportunities with developed countries whereas Zanu PF will remain stubborn to the dynamics of the global economy,” Robertson said.

Apart from promising to create a million jobs by 2018, the MDC also targets a $100 billion GDP by 2040.
It also intends to grow FDI to at least 30 percent of GDP.

In addition, MDC says it will come up with strategies to reduce Zimbabwe’s multi-billion dollar foreign debt.

Bulawayo-based economist Eric Bloch also said one of the incontrovertible prerequisites of meaningful economic recovery is that this year’s elections be irrefutably free and fair, including that there be very substantial oversight of the conduct of the elections by reputable and undoubted observers.

“This will ensure there is restoration of investment security, in order that substantial FDI is forthcoming,” said Bloch.

Comments (1)

The Zim dollar will be back in less than two years. That will be the final looting by Zanu-PF

Gondobwe - 3 August 2013

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