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Donors needed to rescue economy

Shakeman Mugari

PRESIDENT Mugabe’s go-it-

alone policy has failed to revive the crumbling economy, analysts pointed out this week in the wake of attempts by government to approach donors for help.

The government still needs international support to resuscitate key sectors, especially agriculture, manufacturing and fuel and power supplies.

Ministers have already gone cap in hand to donor countries to revive the crumbling health delivery system. The government badly needs funds to put right the education system which has seen a dramatic fall in standards.

The analysts say government would also need donor funds to control its bloated foreign and domestic debt.

This dire need for donor handouts is despite Mugabe’s continued attack on international financial institutions and Western countries which he accuses of habouring neo-colonial designs on Zimbabwe.

The embattled Mugabe has over the last three years accused the West of financing the opposition in order to topple his increasingly unpopular government.  He has also rubbished donor driven programmes like Esap.

However, economic commentators now feel that Zimbabwe’s crisis would worsen without support from the donor community. Prior to the land seizures, the crackdown on the opposition forces and Mugabe’s stand-off with the West, external funds had poured into Zimbabwe boosting the manufacturing and mining sectors.

The agricultural sector was growing until 1999 when government allowed war veterans to invade commercial farms bringing vital production to a standstill. Now Zimbabwe, embroiled in a self-inflicted political crisis, faces starvation.

It is in agriculture that Mugabe urgently needs aid. The agricultural sector — the mainstay of the economy — has shrunk 70% over the last two years. According to the government’s food aid appeal to the World Food Programme (WFP) last month the country has a food deficit of about 1,09 million tonnes for the current season. Normally the country requires 1,9m tonnes to last the whole season. Tobacco production, which in the past has bailed the nation out, has plummeted to alarming levels. Conservative estimates have put this year’s tobacco at 70 million kg compared to a high of 230 million kg in 2000.

About 60% of the national herd has been culled. Government now requires $700 billion for cereal production and a further $120 billion to revive the livestock sector. With government’s coffers evidently empty Mugabe will have to revise his hostile stance against donors to get the funds he so badly needs.

Commercial Farmers Union newly-elected president Doug Taylor-Freeme summed it up at the recent 60th Annual Congress.

“We have a government that is attempting desperately to prove that it runs a country on its own in complete contradiction to globalisation and succeed on its present policies,” Taylor-Freeme said.

“It has turned its back on the international community, not listening to the demands of the people. It has managed to distort and influence every government institution into not making good governance decisions, in the interest of politics. The result is a country that on a free-fall.”

Mugabe would also need to assure potential financiers that government has the capacity to meet its debt obligations.

“Government would need foreign donors to revive the agricultural sector that is currently in the doldrums,” said economic commentator John Robertson.

“To return to normal production government will need foreign currency to acquire inputs and it should have an orderly land reform programme,” he said

“The state has no capital to bring agricultural production to the pre-land reform levels. Worse still it has failed dismally to feed the hunger-stricken peasants. We will therefore require foreign food assistance to avert the looming catastrophe,” he said.

Notwithstanding Mugabe’s public outbursts against Western donors, government has been approaching them for food behind the scenes. Recently the government, through the Finance ministry implored the World Food Programme to provide food relief and drugs. Analysts say the application for humanitarian aid indicates government’s desperate need for foreign help.

“Government now accepts that a wrecked economy needs some aid to kickstart production,” said Robertson. “But the land policies have to be changed to ensure a return to sustainable production. There is need to guarantee security of private property and land if donors are to loosen their pockets.”

Manufacturing, which has plunged 17% over the last two years, is also in dire need of capital injection. Companies which have curtailed production require forex to start up operations again. 

The government requires assistance from multilateral organisations to mitigate the effects of the ballooning foreign debt. The Reserve Bank of Zimbabwe (RBZ) in its weekly economic highlights revealed that domestic arrears have soared to $542 billion for the month of May. Foreign debt has also increased sharply on the back of government’s lavish spending and fiscal indiscipline. 

“We need balance of payments support,” said an economic analyst with the Zimbabwe Economic Society. “We need goodwill from those we owe. Mugabe’s diplomatic blunders have however wiped out the goodwill that the country used to enjoy from IMF and the World Bank.

“Financiers are needed to ease our debt burden for sometime before the country regains it footing. Foreign debt is discouraging international financiers because we now have a reputation of not servicing our loans,” he said.  

Desperate attempts to alleviate the fuel crisis have achieved negligible results. The US$360 million fuel deal signed with Libya two years ago collapsed due to government’s inability to pay and supply agricultural products, as initially agreed. With little hope from the Libyans, government in July approached France. Moves have also been made to lure the Iranians. This indicates a government that is begging for outside aid.   Noczim is reeling under a US$21billion debt wrought by corruption, underpricing and mismanagement. 

Zimbabwe also needs US$17 million to import electrical power monthly. Hwange and Kariba stations, which are currently operating at below capacity, will require money to import spare parts and upgrading existing infrastructure. Every angle of the crisis hinges on the foreign currency availability, the supply of which heavily depends on aid.     

Key Western donors — including the International Monetary Fund and the World Bank, Nordic countries, the United States and Britain — cut their aid to Zimbabwe three years ago over Mugabe’s controversial land seizures, poor economic management and war in the Congo.

Since then Mugabe has turned to the Far East for help. But there is nothing to show for his forays to Thailand, Malaysia, Vietnam and Hong Kong.

The vast improvement and expansion of the education system and the construction of hospitals and roads in the 1980s was financed by donors who saw potential in the newly independent state. Now they have made it clear that no change can be expected from the current regime, and so long as it persists in office, so will the problems associated with it.

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