Broad policies needed to revive economy

HARARE - Six months after government launched its ambitious economic blueprint, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset), the country’s economy is still experiencing a steep decline.

Statistics unveiled by the Zimbabwe Statistical Agency last week revealed that the economy, which showed signs of life during the 2009-2013 era of the inclusive government, is degenerating into a deflation as a result of shrinking economic activity, deepening the gloomy outlook and this would make recovery difficult. Zimbabwe’s annualised inflation for February eased to -0,49 percent from 0,41 percent in January.

Industry is bleeding to death with most companies struggling to stay afloat in a very competitive, dollarised economy.

Figures released by the Zimbabwe Congress of Trade Unions show that several companies have shut down operations this year alone while over 9 000 people lost their jobs last year.

The Zimbabwe Stock Exchange, also an indicator of the country’s state of the economy, is sliding backwards, driving equity prices lower across the board amid a punishing economic slowdown characterised by a biting liquidity crunch.

It is our strong belief that the stock market has fallen significantly since the July 31 elections, wiping out millions off the value of Zimbabwean companies.

Health and social services continue to deteriorate unabated and school children have been reduced to beggars.

Foreign direct investment (FDI) continues to elude the country, thanks to the controversial indigenisation policy, which has seen Zimbabwe’s neighbours getting a lion’s share of FDI.

Instead of addressing these pressing and critical issues affecting millions of people in the country, government has begun putting a cap on parastatal chief executive’s salaries.

While we do not condone the huge salaries and perks these executives were receiving at a time when the majority of our people are living on less than $2 a day and we commend government for the step it has taken to address this anomaly, we feel there is more government can do.

Basic economics will tell you that money saved from cutting salaries will not go to treasury. Is this not ignorant economics being practiced here?

The only way out of this economic crisis, is for the country to attract FDI.

There is no way the economy can grow, in the midst of a crunching liquidity crisis, without the assistance of foreign capital.

And as long as we continue to have the Indigenisation Act in our statutes, it would be hard to attract any meaningful foreign investment.

The government must come up with a comprehensive investment friendly policy that promotes economic growth and social well-being of its citizens.

Comments (1)

No policies will work under the present government the rest is easy.

J brown - 23 March 2014

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