Economy chokes Zanu PF

HARARE - In a bid to avert a looming economic crisis the ruling Zanu PF government is launching a new economic offensive.

Officials say in this fresh strategy, the ruling party will no longer be focused on robustly indigenising foreign business — as enunciated in its manifesto and economic blueprint ZimAsset — but it will aim at attracting foreign direct investment and subsequently the expansion of production capacities in the industrial sector.

Zanu PF has released two clues of its increasingly troubled position on the economy.

The party yesterday convened an emergency politburo meeting to coordinate a response to the deepening economic crisis as business analysts predicted Zimbabwe’s economy would get worse towards the end of the year with economic activity suffering from increasing government interventionism and production bottlenecks originating from the liquidity crisis.

The meeting came hard on the heels of an admission by Finance minister Patrick Chinamasa at a business conference at the Zimbabwe International Trade Fair (ZITF) of the grave challenges afflicting this tiny economy.

“We are confronted with an economy which is heavily indebted, that is a reality I am facing, whether it is China or Malawi or the Bretton Wood Institutions (IMF and World Bank),” Chinamasa said.

“We must be cognisant of the fact that the country needs foreign direct investment. So, we must come up with policies to attract FDI.

“To be honest with you, I’m grappling with the cause of the liquidity problem in the economy. Is it a political issue or an economic issue?”

Just last week, newly appointed Reserve Bank of Zimbabwe (RBZ) governor John Mangudya, in his acceptance speech, warned that the lack of liquidity and its limited circulation within the economy “remains the biggest immediate challenge that the Zimbabwe economy is facing.”

While some hawks in Zanu PF were said to be lobbying for the return of the Zimdollar, Mangudya advised that the multiple currency system needed to be buttressed and maintained to restore and enhance confidence and credibility.

“The multiple currency system is sine qua non for turning around the fortunes of the economy,” he said.

Mangudya, described by Chinamasa as a “Keynesian economist”, said Zimbabwe needed financial discipline amid concerns that government was squandering millions of taxpayers’ money on luxury vehicles, expensive hotels, banquets, advertising and other wasteful expenditure.

The profligate spending indicated government was “out of touch with economic realities in Zimbabwe,” analysts said.

And to buttress the point, Mangudya said there was need for “discipline to utilise our resources efficiently, discipline to know that we need to increase production before we increase consumption,” adding that there was need for the country to refrain “from living beyond our means, as this would bring greed and corruption.”

Mugabe, who won a July 31 vote to extend his 34 years in power, is struggling to breathe new life into an economy that contracted by 40 percent between 2000 and 2008 after a controversial agrarian revolution that slashed exports, and skyrocketed inflation to record highs and strained relations with the International Monetary Fund and other multilateral financial institutions.

“The past three years have been challenging for the Zimbabwe economy and difficult for many Zimbabweans,” the new RBZ boss said.

“People cannot find jobs, companies cannot pay each other as well as servicing their loans with banks, tax revenues are going down and the tax base is narrowing.

“The economy is weaker and the financial system is depressed. We need to be courageous and skilful to manage the situation on hand,” he said.

Over the past two months, government has failed to pay its workers and pensioners in time, and has relied on Value Added Tax to bankroll salaries.

The tax collector Zimra has also trawled company accounts looking for outstanding obligations to finance government expenditure.

The ruling party’s economic blue print Zim Asset, which proposes a cocktail of measures to revive the economy, including borrrowing money from Brazil, Russia, India, China and South Africa, a group of large emerging market nations collectively known as BRICS, and setting up a sovereign wealth fund, has so far failed to attract any funding amid reports it needs $27 billion.

ZimAsset also proposed the sale of bonds, securitisation of remittances, re-engagement with international finance institutions and the creation of special economic zones, but without funding, all this remained pie in the sky, analysts warn.

Government has had to confront the reality that it might have to revise its ambitious 6,1 percent growth projections for this year.

Social service provision on the one hand is also collapsing as more and more people fail to access basic economic rights enshrined in the new Constitution such as water, health and education.

The economy, which has been stagnating, has taken a turn for the worse after the July 31 election which saw Zanu PF claim a landslide victory.

At yesterday’s  meeting of the ruling party’s supreme governing body, the politburo, business ideas on how to save the economy were high on the agenda.

Analysts said reality was beginning to sink in that a new paradigm was needed to save the economy.

University of Zimbabwe political science lecturer Eldred Masunungure said the 51-year-old liberation movement was beginning to realise that there was need for urgent interventions to prevent total collapse of the economy, hence the extraordinary meeting.

“It’s recognition that things are going haywire, things are falling apart,” Masunungure told the Daily News.

“They are trying to find ways of averting an inevitable collapse of the economy.”

The political scientist said the ruling party would also seek to enforce a shift in economic policy which will boost investor confidence which had been eroded by multiple messaging from government.

“They are biting the bullet and we are going to see the shifting of economic policies,” he said.

“There have been conflicting signals sent to investors and this meeting might have been convened so that they come up with a unified position on the economy because investors have been confused by the multiple positions coming from the Zanu PF government.

“They have been singing from multiple hymn books. And this meeting will probably see policy cohesion.”.

Political analyst Maxwell Saungweme said it was natural for Zanu PF to convene a meeting on the economy because of the dire current state of affairs. He described the current situation as an “economic emergency.”

MDC leader Morgan Tsvangirai on Sunday told party supporters during a rally in Norton the economic problems bedeviling Zimbabwe could culminate in an uprising, warning that many have been pushed to the brink by the collapsing economy.

Tsvangirai warned that people might be forced to take to the streets demanding food if the economic situation was not addressed speedily.

But Masunungure ruled out mass action, saying Zimbabweans have gone beyond the search for a collective approach and that the suffering people would deal with their problems at an individual level.

“Gone are the days when the ZCTU led by Tsvangirai would organise food riots and massive stay aways,” Masunungure told the Daily News. “Tsvangirai is living in the past for suggesting that. “

Comments (51)

What choking? Unfortunately the economy will not plunge just because you wish it so!

godfrey gudo - 13 May 2014

I've noted of late that it is increasingly becoming fashionable among a few people to attack the Daily News and be rude towards the paper and other readers on this forum. Surely Mr Gudo must be the only one among Zimbabwe's 13 million people (including Zanu PF and MDC supporters) who doesn't think or feel that our economy is under serious stress.

Mercy - 13 May 2014

Extreme poverty in a land of extreme plenty. Sad indeed.

mambo - 13 May 2014

They need to show us their seriousness now by immediately proposing a bill highlighting all the changes on the Indegenisation act to be taken to parliarment for debate and approval. Without that, Investors will keep their distance.

Dr Know - 13 May 2014

Mati madii kusvika madzora mavhoti edu. I doubt kan Mugabe akadzidza Ini vanoti Mu gabe akadzidza vangani nezvaanoita izvi.

Dzoraivhoti - 13 May 2014

It looks like ZANU PF fellows are a bunch of slow learners. It took them so long to realize that the economy is in a mess. These geriatrics are hopeless given that even Grade Zero kids realized a long time ago that the economy was on auto-pilot!

Jega Hwindi - 13 May 2014

"To be honest, I'm grappling with the liquidity problem in the economy. Is it a political issue or an economic issue," said Chinamasa. Honestly, can Zimbabweans trust such clueless fellows to manage the affairs of the state? Zimbabwe is a failed state indeed!

Manje Soo - 13 May 2014

Listen Chinamasa. The economy can only perform when all other fundamentals are in place. There is need for the rule of law, respect for property rights, good laws, a government that ensures that all the necessary infrastructure and institutions are in place, no or little corruption and a generally conducive political climate..... for the economy to start kicking. Such a conducive atmosphere includes free and fair elections. Since such an environment does not exist let us , for now, forget about a functioning economy.

Sekuru Kaguvi - 13 May 2014

This economy need the intervation of GOD not pple. Even mdc-t cannot solve it otherwise ZANU-PF is far much better.

truezimbo - 13 May 2014

This "Gudo" is it just a name or its a real baboon among humans?

Kufakwejeyi - 13 May 2014

It is naive for anyone to pretend that only God can fix Zw's economic problems we know were brought about by bad governance.Please stop playing around with the name of our great God for man made problems. God has absolutely nothing to do with Zimbabwe's economic problems caused by sheer human greediness.There has been this equally foolish talk that Mugabe was anointed by God to rule Zimbabwe which the former has thoroughly destroyed.Let us NOT hide behind a finger.This is NOT a natural disaster like earthquake or rain floods of Tokwe/Mkosi.ZANU PF has totally failed & this does not necessarily mean that other parties will also fail. God will never come on earth just for Zimbabwe.He freely gave us eyes &brains to use!!!!

MASAGAMASAGA - 13 May 2014

It is naive for anyone to pretend that only God can fix Zw's economic problems we know were brought about by bad governance.Please stop playing around with the name of our great God for man made problems. God has absolutely nothing to do with Zimbabwe's economic problems caused by sheer human greediness.There has been this equally foolish talk that Mugabe was anointed by God to rule Zimbabwe which the former has thoroughly destroyed.Let us NOT hide behind a finger.This is NOT a natural disaster like earthquake or rain floods of Tokwe/Mkosi.ZANU PF has totally failed & this does not necessarily mean that other parties will also fail. God will never come on earth just for Zimbabwe.He freely gave us eyes &brains to use!!!!

MASAGAMASAGA - 13 May 2014

It is naive for anyone to pretend that only God can fix Zw's economic problems we know were brought about by bad governance.Please stop playing around with the name of our great God for man made problems. God has absolutely nothing to do with Zimbabwe's economic problems caused by sheer human greediness.There has been this equally foolish talk that Mugabe was anointed by God to rule Zimbabwe which the former has thoroughly destroyed.Let us NOT hide behind a finger.This is NOT a natural disaster like earthquake or rain floods of Tokwe/Mkosi.ZANU PF has totally failed & this does not necessarily mean that other parties will also fail. God will never come on earth just for Zimbabwe.He freely gave us eyes &brains to use!!!!

MASAGAMASAGA - 13 May 2014

It is naive for anyone to pretend that only God can fix Zw's economic problems we know were brought about by bad governance.Please stop playing around with the name of our great God for man made problems. God has absolutely nothing to do with Zimbabwe's economic problems caused by sheer human greediness.There has been this equally foolish talk that Mugabe was anointed by God to rule Zimbabwe which the former has thoroughly destroyed.Let us NOT hide behind a finger.This is NOT a natural disaster like earthquake or rain floods of Tokwe/Mkosi.ZANU PF has totally failed & this does not necessarily mean that other parties will also fail. God will never come on earth just for Zimbabwe.He freely gave us eyes &brains to use!!!!

MASAGAMASAGA - 13 May 2014

It appears that the ruling party never learns; indeed they are slow learners who realises the rotteness of something when they see snails coming out of it. It is very easy to destroy and rebuilding is costly. stealing is far too easy but correcting one's behavioural patterns isn't that easy. Corruption became a normal habit that earns the elitists promotion. to them it is not a crime it is permissable. forget about dealing with this cancer, they are not prepared of ruthlessely dealing with the culprits

kt - 13 May 2014

truezimbo, if you are honestly a truezimbo then you shouldn't in any way include God in the zim economy. the problems bedeviling the economy are purely 1000% man made by you know who. stop using the name of God in vain. Can you blame God for not using the brains He gave you?

kt - 13 May 2014

The dream is over, welcome to reality!

sabhuku - 13 May 2014

Chinamasa and his friends thought it was easy to govern. The chaps thought that since they had Nikuv and Mudede in their pocket everything would fall into place soon after the elections. Governance is a serious business, brother Patrick. You cannot continue consuming (looting) while not producing anything. That's basic common sense as well as basic economics. It's time to revisit the basics!

Zvadzvanya Manje - 13 May 2014

ZANU PF was given a rude awakening by their so called all weather friends from the east upon whom they expected would fund their pie in the sky dream they named ZIMASSET. They thought everything would be smooth sailing soon after their rigged election victory. Welcome to the real world Chinamasa and crew.

Sinikiwe Shumba - 13 May 2014

The President should not have recycled dead wood in cabinet he should have put in Zanu moderates or young turks who are not very "revolutionary" when confronted with issues which require sober minds.

protestor - 13 May 2014

You can say lot about the collapse of our economy but everyones the truth the zanu pf government should do even they want to out weigh their imposed babaric policies does not yield anything because we are known by all over the world by our manner of inconsistency that will only benefit the looters

taws - 13 May 2014

Chinamasa better call Tyrone!

whoa - 13 May 2014

You can say lot about the collapse of our economy but everyone KNOWS the truth ABOUT zanu pf government even IF they want to out weigh their imposed babaric policies does not yield anything because we are known by all over the world by our manner of inconsistency that will only benefit the looters

taws - 13 May 2014

The only durable solution to the Zimbabwean economy is for every citizen with the means to do so should start investing, create employment and pay the tax man - however small that investment could be. The government on its part should see to it that the key pillars to any successful economic investment are in place and are never in short supply: (a) energy (b) water (c) transport system These should be supported by political stability, political will and consistent economic policies. The foreign investor should be welcome but only to compliment the efforts of the Zimbabwean investor. It would be naïve to think that foreign investors will flock to Zimbabwe when their own countries are facing high unemployment.

Pombiyadonha - 13 May 2014

They will rule to the grave, it has not begun as yet...Watch this space..2008 will come to haunt us..

Zuruvi - 13 May 2014

Hallucinating ,hallucinating and hallucinating is the order of the day in zanu camp. Only total idiots can believe this rubbish .We are not fools you remember in the 1990s how zanu brought esap from there many foolish programs followed and here we are the poorest nation in the world with no currency of its own. For as long as Mugabe is available nothing is going to work in this country. Now who is fooling who

Siamababa - 13 May 2014

That is a big fallacy and a figment of your imagination,because yes the Economy is not doing well because of many factors of sabotage by big Cooperations who shipped out loads of cash before and soon after elections ,SANCTIONS which you people and your puppets in the MDC campaigned for are still there because the Gvt cant access international credit facilities,the new Gvt has been in office less than a year and already you prophets of doom are already seeing armageddon.You are trying to echo what your deluded puppet Tsvangirayi is peddling in order for him to get back ito government through the back door because his puppet masters have pulled out and he is now broke like an empty pocket.When the idiotic baba jukwa was saying silly things about Zanu pf you ran big headlines mukaridza hwamanda but now that he has been unmasked you no longer want to say anything about it.Daily News you are PATHETIC.WISE UP

mike muchapondwa - 13 May 2014

This @Mike Muchapondwa sounds seriously delusional. Are you an inhabitant of this planet and what sanctions are you blabbering about?

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esther veritas - 13 May 2014

Nikuv 1- Economy 0 pa halftime

lee moyo - 14 May 2014

Ladies and gentleman is it not better to have a bunch of geriatrics who have the ability to accept the need to revise certain policies for the good of the economy than the whole lot of us who have absolutely nothing to offer but make the loudest noise. If you have a suggestion lets here it not the tired rule of law, respect for property right etc. Are these in existence in Iraq, Egypt Yemen, UAE etc and how does the IMF qualify the loan of $17 billion to Ukraaine? Let us be our own FDI's and the economy will tick. How much money leaves this country everyday to bring back trinkets. Just do a simple arithmetic of 50 buses each with 40 passengers each carrying $200 passing through the border everyday to SA. Complaining will not help us lets offer sound solutions.

Patrick M Utete - 14 May 2014

how can you expect an economic blueprint from a group of people who believe diesel can come out of a rock.give us a break just shut up.

nyoka - 14 May 2014

@Patrick Utete. It is a fact of nature that geriatrics in general, and nonagenarians in particular, have very little left in terms of ability to contribute in terms of progressive ideas. They are are past their "sell-by" dates. All they contribute are stale ideas which are no longer workable in a modern economy. They need to be pensioned off to their ill-gotten farms. Mr Utete, investors investors invest because they basically look at two things: their expected return (gain) from the investment as well as the risk prevalent in the economy. As of now the risk factor is just too high due to policy inconsistencies and an unstable political outlook. Who wants to invest where there is a risk of expropriation and price controls? Our tax laws also leave a lot to be desired and investors rush to countries with favourable taxes. Even some Zimbabweans are investing in South Africa, Mozambique, Botswana etc as we speak due to the investment climate there that is generally favourable. The countries that you mentioned such as Iraq and Egypt are operating well below their potential because of instability there. I can assure you that there is rule of law and policy consistency in UAE. FDI stands for foreign direct investment so we cannot have "our own FDI" as you say. The locals do not have the capital to kick start the Zim economy. At this point we need both local and foreign investors. In short, we need a conducive environment for entrepreneurship and private businesses to thrive. Once these are in place government will have a good source of income through various taxes and the livelihoods of Zimbabweans will greatly improve.

Savious Dhashurai - 14 May 2014

Mr Utete that give $400 000 multiply that by 365 thats 146 million a year which is only about 4% of the national Budget. So solving that we have managed to secure the 4% of our annual budget whats next and by the way i know women cross boarders who make probably 60% of that number they leave with sewn clothes, chairbags locally made pesticides and hair products and our own orange crush and they come back to Zim with foreign currency way more than your $200 at a profit margin of at least 200% they spent it all on our soil to build houses to send kids to school to put food onthe table where at each purchase they are taxed heavily so in short yours is not a problem but rather hidden solution to be enhanced. By the way the sewn clothes create employment so does the mazoe and hair products. All im saying is this aint an easy task. Zanu messed it and MDC may not be the capable hand to Dig it out as well the current generation simply wont solve this maybe our great grand children Zanu pushed us too deep here and the greater we face reality on that the more sound solution may start coming.

Tawa - 14 May 2014

Indingeization I think was meant to prevent Assets and Shares being too much diluted on the market against their real value, but on a latter that system was perverted by greedy Managing Directors and Asshole Lickers of both parties, while the stupid consumer has nothing made up with the money he got nobody still seast on a tractor because people like to blame each other on their own failure of getting out of their lazy life. That's the reality nobody want to hear in Zimbabwe by now.

Emperor - 14 May 2014

Mike Muchapondwa i believe you didn't read and understand this article Chinamasa said “We are confronted with an economy which is heavily indebted, that is a reality I am facing, whether it is China or Malawi or the Bretton Wood Institutions (IMF and World Bank),” Chinamasa said. “We must be cognisant of the fact that the country needs foreign direct investment. So, we must come up with policies to attract FDI. “To be honest with you, I'm grappling with the cause of the liquidity problem in the economy. Is it a political issue or an economic issue?” clearly its dawning on everyone (except you obviously) that things are bad. denial is some peoples downfall, people with no clue of whats going on in our economy shouldn't be running things otherwise they are just receiving big salaries for being clueless. Our country needs fathers like those who fought the liberation war who have the guts to do what needs to be done so that people can have better lives and not be selfish.

Joseph Gabriel - 14 May 2014

Ana Gudo, this is not a wish.

Godfrey Imboko - 14 May 2014

You might hate him or like him Tsvangirai said this way back, that the administration of Zanu pf, has no solution to this crisis. I still remember when zanu pf took the farms and what did Tsvangirai said "murikuti murikufa ne nzara , muchafa nenzara ". And what happened in 2007- 2008 and things stabalised when he joined hands and now they rigged the election and What did Tsvangirai said wait and see. Yes he might be uneducated but this guy has wisdom than everyone in zanu pf. The good thing about Tsvangirai is that he admits to his failures and seek for advice, he is not a man who says ndinoziva. Zimbabwe needs Tsvangirai than zanu pf, we are doomed. I rest my case. Hate him or like him, he is the one with the keys to the solutions of Zimbabwe.

Reason - 14 May 2014

Pamberi neZanu pf, pamberi nava mugabe, pamberi ne zimasset, pamberi nema china pasi ne MDC-T

Tendai biti - 14 May 2014

Daily News is too negative...We know they hate ZANU but soemtimes it seems they hate Zimbabwe as long as MDC&Tsvangirayi are not in government....Many of the economic issues we face now started in the GNU but Daily News never criticised but as soon as July31 came suddenly they discovered that hundreds of companies closed in 2011/12/13...that civil servants were poorly paid and that there was a liquidity crisis????You may wish the economy to crumble in the hope that Zimbabweans will turn to Tsvangirayi but truth is it is wishful thinking.

wezhira wezhara - 15 May 2014

People lets not rush to comment things we did not understand lest we embarrass ourselves. To those who hate Daily News l say " VERENGAI MAPAPER NHAU ENYU" Eg ZPF Herald. Leave our Daily News alone. Get it thru our thick heads, you knuckle heads! By the way, you cannot separate economy from politics. These two are intertwined. Stop blaming sanctions. Kana zvanetsa ZPF ne MDC neMAVAMBO KUSILE DAWN batanai muite imwe GNU. Each Party cannot solve the crisis we have in Zim alone. Its a compromise, really.

Prof Jon Tan - 15 May 2014

Daily News will not make it to this time next year...they forget that the economic decline they so geefully wish for will affect them also and perhaps moreso given their already faltering fortunes.....They don't bother with facts just speculation,praise singing for Tsvangirayi/Makandiwa and doomsday prophesying economic doom.......eg Politburo meeting was not an emergency meeting convened over economy but was a routine meeting brought forward from Wed to Mon since RGM was going to Singapore on Tue....easily verifiable fact if anyone had bothered

wezhira wezhara - 15 May 2014

companies are shutting down instead of opening. we need policies like Industrial Recovery Act focusing on issues affecting the companies and offering them relative policies for their trade and boosting their production. Foreign direct investment a major need but without favorable industrial policies the economy will continue shrinking.

freddy - 15 May 2014

Attracting FDI is one of the only solutions left. The FM should be bold enough to take this step at the expense of the Party.

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