'Economy to nose-dive'

HARARE - With reports indicating yesterday that Zanu PF and President Robert Mugabe were headed for a controversial win in the harmonised elections, the economy is likely to nose-dive, economists say.

According to Mugabe’s Zanu PF manifesto, the 89-year-old leader — who has presided over the country’s economy since independence from the British in 1980 — is bent on perpetuating his economy-damaging policies.

Despite experts advising that Zimbabwe, particularly its economy — still suffering a hangover from a decade-long recession under Zanu PF rule — is not ready for elections, Mugabe was adamant.

Following proclamation of the July 31 election date, the fragile economy suffered, with investors, mainly offshore, withdrawing and with Finance minister Tendai Biti a week ago compelled to slash the economic growth target to 3,4 percent from 5 percent.

He said the election created massive uncertainty, among other politically related challenges.

Economic experts contend that the revolutionary party, which has ruled Zimbabwe for the past three decades, has no clue and capacity to drive Zimbabwe’s economy forward.

Mugabe and crew have their work cut out.

Among the major economic challenges, Mugabe’s government ought to address is massive unemployment — hovering above 80 percent, revive industry currently operating at way below 50 percent capacity, attract foreign direct investment (FDI), which has dwindling by 57 over the past year.

The government also needs to address the burgeoning balance of trade deficit.

Imports continue to far outweigh the country’s exports as the local manufacturing sector is struggling.

According to Treasury, Zimbabwe’s trade deficit for 2012 stood at $3,6 billion as the manufacturing sector continues to operate below 50 percent capacity.

Industry is struggling to access external lines of credit due to a perceived high political risk tag, which Zanu PF has struggled to shake off.

Recently, Biti indicated that a post-election government will be faced with a mammoth task to meet budgetary needs of an expanded Parliament, inherit domestic arrears, fund the education and health sector and source fund for the 2013-2014 agricultural season.

Crucially, Mugabe’s government faces massive civil service unrest with mounting pressure to raise the public servants’ salaries.

“The government must have a buffer of at least $1 billion for the new governance structure,” Biti warned.

Although in its election manifesto Zanu PF promised to create 2,2 million jobs in 14 sectors of the economy over the next five years, history has shown that the political party has no financial muscle to bring the economy back to its former glory.

Its indigenisation policy — which forces foreign-owned firms to cede 51 percent of their shares to local Zimbabweans — has caused investor flight while others have adopted a-wait-and-see leading stagnation of the economy.

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 noted that 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.”

“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.

Renowned economist John Robertson said Zanu PF enforced policies that will “indeed bleed the economy” and “discourage 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.

“Greenfield investment monitor, FDI Markets, has tracked a significant decline in investment into Zimbabwe between 2010 and 2012.

A total of 14 projects were recorded during 2010, decreasing to 13 in 2011, before sharply falling to just six in 2012.

This 57 percent decrease can, in part, be explained by the increasing political and investment risks that Zimbabwe represents,” said the US-based think tank.

Zimbabwe’s political risk and negative perception, which the country courted at the height of Zanu PF chaotic and controversial land reform programme at the turn of the millennium, is expected to worsen if Zanu PF romps to victory.

Mugabe has repeatedly told Western investors to stay out of Zimbabwe if they are not willing to be junior partners in companies operating in the country.

“Zimbabweans must benefit from this land. If others want to share, they should come not as masters but as subordinates,” said Mugabe at a rally at the weekend.

Economic experts also warn that a Zanu PF win is also likely to see a premature return of the Zimbabwe dollar as successive Zanu PF annual conferences since 2010 have called for the return of the discredited currency.

During the launch of its election manifesto President Mugabe promised to bring back the worthless currency, which was discarded in 2009 in favour of a multiple currency system.

The establishment of the Inclusive government in 2009 brought economic stability to Zimbabwe and halted a decade long economic meltdown.

Following the subsequent adoption of the multi-currencies the country embarked on a growth trajectory registering and average of Seven percent gross domestic product (GDP) growth between 2009 and 2011.

Comments (10)

desperate article written by a desperate man. face the reality and knock it into your skull that zimbabweans simply want a fair share of their wealth... period

pop - 2 August 2013

the truth is these policies have not done any good to the economy hence , a nosedive is wat we heading for ,,,,,

akc - 2 August 2013

@ pop ndookunozvi kupemberera chikwambo tichiti rugare rwauya. Just wait and see flies will never produce honey and tichadya nhoko dzezvironda nemaronda acho asi tosu.......... chando zvino as nhamu yopfunya zvisero!!!!!!!!!!!!!

L. Nyati - 2 August 2013

IN RESPONSE TO POP ,you are a popcorn for sure what is being said in the article is economics my friend not your ZANU way of loot and squnder policies that your president is saying.NO INVESTOR would risk his money only to lose it to vultures.if you think your policies are okey then were is your ZIM dollar then .these policies are the same policies that we have been using that have given us this dead economy.If SA &USA remove their currencies from circulation the economy will come to a standstill ,Gone are the days when we said BLAIR KEEP YOUR BRITAIN & I WILL KEEP MY ZIM ,We are now living in a global village whereby we trade with everyone in the world not AFRICAN countries they are poor like us .

CASHTALK - 2 August 2013

Zpf supporters and leaders have no sense of economics. What they will do now is to continue the looting of national resources, resort back to the Zimbabwean dollar and oil the money- printing machines, re-introduce massive inflation, and continue the ruinous policies of self-enrichment called indeginisation, increase unemplyment levels, and create more exiles to flood the region. Any protests will lead to massive arrests and torture of innocent people, and Mugabe will continue flooding the hate speech against the British, EU and the United States for being responsible for every one of ZPF's econmically ruinous policies.

chenjerai hove - 2 August 2013

US currents was not brought by MDC we were already using it before the inclusive govnt so stop lying that US will withdraw its currency. US currency is an international currents hence any country can use it without seeking US permission.

nigel Munach - 2 August 2013

US currents was not brought by MDC we were already using it before the inclusive govnt so stop lying that US will withdraw its currency. US currency is an international currents hence any country can use it without seeking US permission.

nigel Munach - 2 August 2013

man how did we get here seriously every person should ask themselves. economics was never part of zanu pf school only thing they understand is to grab and loot and fill themselves these gluttons how will our credible? justice makarau announce these results knowing they aren't a true reflection of the common folk. amai I hope moyo wekurera wont be supressed and you reveal the truth

mugarepi - 2 August 2013

ZPF understands bush economics, have degrees in violence and election rigging,just wait and see the return of ZWD accompanied by raw sewage economic fundamentals = continued suffering for the people

Ricky - 2 August 2013

democracy is about who is the most popular whether he is an idiot, a cheat,a sorcerer. be disappointed in the leader who failed to anticipate his opponents move was better than his, n not the opponent who was smarter.

tandem - 3 August 2013

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