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Published On: Mon, Nov 17th, 2014

Zimbabwe’s Economy: Back on The Precipice

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By Eddie Crosseddiecross

On the Edge of the Precipice

I have not seen the new IMF report on the Zimbabwean economy but I think I can describe its analysis of our situation as “fragile”. They certainly list us as a fragile State in their 2014 report on the status of African economies and they also recognise that we are not making progress.

In fact I think the situation is worse than this, the Minister of Finance and the Governor of the Reserve Bank both continue to claim that we can expect growth this year. Even John Robertson, well known for his pessimistic projections of our prospects says he only expects a decline of 1 to 2 per cent. I see little sign of anything of the sort, with VAT receipts down by a third in the last quarter and clear beer sales down by 30 per cent this year over last, I cannot for the life of me imagine that we are going to see anything other than a steep decline in economic activity this year.

In July 2013 we had 23 functioning banks – today there are 14 and several of those may go to the wall before long. The collapse of so many banks and the reduction in the declared profits of all Banks by half this year after last, is the clearest signal that we are back in a full blown economic crisis. Right now all State employed doctors are on strike and just yesterday I heard that a major local mental hospital was appealing for food to feed their patients. Conditions in our Prisons, already serious, are now desperate.

Revenues to the State are declining and the Minister told us last week that 82 per cent of all revenues were now being absorbed by employment costs, up from 60 per cent last year. We have to ask ourselves are we on the edge of a full blown economic collapse?

It started with the outcome of the 2013 elections which took everyone by surprise – even the winners. The economy judged the outcome harshly with flight of capital from the banks and the country and the collapse of the stock market by over 30 per cent. Since then we have seen accelerated company closures and bank failures and confidence in all sectors is at an all time low. Worse, in many observers opinion, than the situation in 2008.

The most serious aspect of it all is that the Government, led by Mr. Mugabe, seems to have no ideas at all about what to do about the crisis. They seem to be locked in a policy paralysis that stops them doing what is required to slow the decline and then turn it around. This was best illustrated by Mr. Mugabe’s statement at the opening of Parliament that there would be no changes to the indigenisation policy.

Top of the list of things that need sorting out is our political situation. Instead of doing what is required, Mr. Mugabe does nothing. As his health fails and he steadily loses his grip on power at the center of the State, the many factions and powerful elements in his administration struggle for ascendancy and control. Just look at the list of claimants: the army chief, Chiwenga; the Minister of Defence, Sekeremyi; the former Governor of the Reserve bank, Gono; Vice President, Mujuru; the Zanu PF spokesperson, Gumbo; the Minister of Justice, Mnangagwa. This list just keeps on growing and on Monday we hear that Madame Grace is about to do another round of destructive politicking.

Every day the papers are loaded with stories of infighting and squabbles. This adds to the atmosphere of uncertainty and instability. Just below these lofty dog fights, there is another layer of infighting – yesterday the leader of Chipangano, the criminal Zanu PF gang that has terrorized Mbare for two years or more, was kidnapped, savagely beaten and dumped on the airport road. The golden boys of Zanu PF business men and women are all under attack and threats. It seems that Zanu PF is engaged in an orgy of self destruction and conflict.

What we need is new leadership, strong leadership with a clear grasp of the extent and depth of our problems and a willingness to do what is required, and quickly. Instead I fear that the Zanu PF Congress, starting on the 2nd of December is going to yield no changes, Mr. Mugabe confirmed as President for life, Vice Presidents with no capacity and a ruling party that is divided and fractured irreparably with many elements with the power to make mischief.

Such a situation will suit the MDC best, Ncube and Biti are trying to craft a political alliance that will gain some traction but multiply a zero with a zero and you still come up with nothing. No political alliance in the opposition makes any sense without the MDC and Morgan Tsvangirai. Our own position following a successful Congress and the adoption of a new road map and policies for the future; puts us in a leading position once more to take up the cudgels of change. It is time that Ncube and his ilk, admitted that they cost us change in 2008 and they must not make the same mistake twice.

We need to evolve a consensus as to what is wrong, agree on how to put things right and then push Zanu PF once more into negotiations. This time with no compromise on the issues of governance and democracy. Ideally the country needs a national government to take it forward into the future, one that will implement the new Constitution properly, enforce it and institute policy changes to get us back into the mainstream of global economic activity and political dialogue. Then at the end of this extended transition, hold elections that no one can dispute and supervise the transfer of power to the winners.

After 35 years of disastrous government, all internal savings have been destroyed, because of this there is no alternative but to reengage with global markets and financial institutions and this is only possible if we seek to clear the political obstacles to reengagement and growth.

The first thing to tackle would be legal – reestablish our Judiciary as a center of power and control over the State, ensuring the rule of law, equality before the law and the independence and professionalism of our Bench. We have to guarantee that never again will we allow property rights, human rights and contract law to be violated the way it has in the past two decades.

The second priority would be corruption, do not try to tell us that we do not know who is corrupt, we know that full well. We need to take action against a few high level Ministers and Officials, Generals and business persons who are clearly corrupt and unable to explain their wealth. We must crack down on petty corruption on our roads and at our border posts.

The third priority is to scrap indigenisation. I have always said that no company, from anywhere in the world, would tolerate a situation where they are required by law, to hand over 51 per cent of their shares and with that full management control to people whom they do not even know. It’s all very well saying the law is “misunderstood” but you are dealing with a regime that has just stolen US$30 billion in assets from thousands of local businesses without compensation and that is what the indigenisation Act and its attendant regulations say.

Then finally we have to get down and do the detailed work needed to clean up our act as a nation – across the board, put our affairs in order and eliminate the obstacles to investment and growth.

Do all that and I guarantee we will turn Zimbabwe around, but it all starts with politics.

Eddie Cross is MDC MP for Bulawayo South. This article first appeared on his website www.eddiecross.africanherd.com 

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