Uncertainty haunts Zim

HARARE - As the country races towards year-end, the aftermath of Zanu PF’s heavily-contested election victory has brought uncertainty on a stuttering economy and could have a negative impact on millions of Zimbabweans reeling with poverty and a bleak future.

Long-suffering Zimbabweans are facing the nightmarish prospects of reliving the extreme hardships of 2008.

This comes against a backdrop of calls by the workers’ representative body, Zimbabwe Congress of Trade Unions (ZCTU) for government to declare a poverty datum line (PDL)-linked minimum wage for all workers, which is pegged at $561 according to the consumer watchdog, Consumer Council of Zimbabwe (CCZ)’s basket for July.

The CCZ basket depicts the cost of living in Zimbabwe and if it were adopted as the official Poverty Datum Line (PDL), millions of families would be classified as living in abject poverty.

“We do not know where the country is heading to, therefore we need to prepare the lives of the working people by giving them a PDL minimum wage. We are simply demanding food on the tables for the proletariat,” said ZCTU’s president George Nkiwane.

He added the issue was pertinent and did “not need waiting for things to get bad for workers, so this must be done now.”

With economic analysts saying the country’s unemployment rate remains very high at more than 70 percent, with less than one million people formally employed out of a 13 million population, many families are becoming increasingly vulnerable to poverty and hunger as disposable income continues to dwindle unabated despite the stability of prices.

“This minimum wage we are calling for should cushion workers especially those in the civil service from the dangers of living from hand to mouth,” pointed out Nkiwane.

Many have expressed concerns over how the election dispute could further plunge the lives of many Zimbabweans into misery as the economy is now on stagnation mode after recovering in 2009, following the adoption of a multi-currency system.

Zimbabwe suffered a decade-long economic depression when annual inflation by November 2008 reached the second highest in history, at 79,6 sextillion percent and worsened by the  Zanu PF government after it  tried to fill the enormous budget deficit gap by printing money, resulting in hyper-inflation.

Government tax revenue rapidly shrank, as a result of hundreds of retail and commercial businesses that were dependent upon the farming sector failing to maximum their capacity utilisation.

Supermarkets experienced empty shelves which were an eyesore with people queuing for everything, including cash, fuel, bread, cooking oil and other basic necessities.

Violent land seizures which began as early as 1999 resulted in a cascading set of economic failures, despite the agricultural sector commanding only 15 percent of the economy.

After dollarisation in early January 2009, inflation immediately fell to -2,3 percent by the end of the month and stabilised thereafter to between two to three percent.

The land seizures symbolised an overall breakdown in rule of law.

Foreign investors fled and spooked tourists changed travel plans, creating even more downward economic spiral.

By 2005, the loss of the country’s wealth from the land seizures alone stood at $5,3 billion, calculated to be more than all the foreign aid Zimbabwe had received since its independence in 1980.

The country still remains a net importer of South African products with a trade deficit for the four months to April widening to $1, 6 billion, after Zimbabwe imported goods worth $2, 62 billion against exports of $1, 02 billion.

The burgeoning trade gap has affected the recapitalisation of the manufacturing sector, whose capacity utilisation, according to the Confederation of Zimbabwe Industries has declined to 44 percent and requires an estimated $2 billion to operate at full capacity.

Christopher Mugaga, an independent economist, said 2013 is bound to see Zimbabwe’s economic prospects wane as political risk will be a major negative factor after Zanu PF’s disputed win.

He pointed out that Zanu PF “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 the country’s gross domestic product (GDP) progressing at less than 1,2 percent.

“The last 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 outgoing Finance minister Tendai Biti 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 added that 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 dilapidated 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.

Comments (2)

I believe Mugabe will pursue these policies to weaken the economy more, in order to drive out people from the cities that vote against him. Because once they are outside the country, they cannot vote against him anymore.

Tiger Shona - 12 August 2013

ZIM'S ECONOMIC SITUATION IS PITEOUS. I DON'T THINK IT WILL BE ABLE TO PICK UP. INVESTORS ARE NOT PREPARED TO INVEST IN ZIM BECAUSE OF MUGABE'S POLICIES WHICH ARE AGAINST THEM. ZANU PF DOES NOT CARE ABOUT THE LIVES OF THE PEOPLE OF ZIM. SERVICE CHIEFS ARE EGOCENTRIC. THERE ARE RICH WHILST THE MAJORITY OF ZIMBABWEANS ARE POOR. THEY DON'T WANT ANY OTHER PERSON TO RULE THE COUNTRY BESIDES MUGABE. THEY KNOW THAT IF ANY OTHER PERSON IS GIVEN POWER HE OR SHE WILL REDISTRIBUTE PROPERTY. SO THERE ARE AFRAID THAT THEY MIGHT LOSE SOME OF THEIR PROPERTY.

MICHAEL - 13 August 2013

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