THE much-vaunted economic turnaround programme rooted in the recent monetary policy statement is in serious danger of losing direction as a host of problems militate against its success.
A worsening fuel crisis has become the single largest threat to any efforts to transform the economy from its current parlous state as industry and commerce are slowly but surely grinding to a halt.
The long-standing fuel crisis alone has serious repercussions for a country which is battling to survive rapid de-industrialisation.
In addition, the spectre of increased company closures, unemployment, rising inflation and low production in the key manufacturing sector, where many companies are reportedly operating at less than 20% capacity, has put great pressure on the turnaround programme’s survival.
What is even more worrying is the fuel crisis’s impact on productivity. Key workers are being forced to spend hours on end in fuel queues, man-hours that cannot be recovered, with a consequent impact on companies’ ability to produce goods and services and meet profit and turnover targets.
Staff are spending many working days searching for fuel, meaning that the rate of absenteeism at work as people queue for fuel is rising daily.
On the other hand, workers are either coming to work late or leaving for home early, because public transport has been paralysed by the fuel shortage.
Zimbabwe is in a serious danger of closing shop unless the authorities do something drastic to ensure a steady delivery of fuel countrywide.
Even sub-sectors such as tourism, which are expected to be vehicles of much-needed foreign currency, will find it extremely challenging to meet targets as domestic tourism will soon grind to a halt. Both tourists and locals are unable to travel to resort areas due to the fuel crisis.
Industrialists say while the recent measures to funnel money to exporters at concessionary rates of 5% have been welcome, analysts believe that without a commensurate increase in foreign currency allocation this additional support will not yield any immediate result.
Local companies are in desperate need of foreign currency, not local currency, to import essential inputs, raw materials and spares to enable them expand and increase output.
And critics of the monetary policy review have questioned when the country will generate enough foreign currency to enable industry to import essential inputs, increase output and the supply of goods on the local market.
They say inflation continues to be a major threat to any measures to stabilise the macro-economic environment.
A few pointers illustrate how difficult it will be to contain an inflationary spiral: The unbudgeted fiscal expenditure on an expanded cabinet and the accompanying civil servants will mean government has either to borrow from the central bank or money market, or simply print more money.
Wage and salary increases expected to be effected from July 1 as well as increases in tariffs by state utilities such as Zesa will add to the inflationary cycle.
The recent increase in food prices, sanctioned by the government after talks with producers, is yet to filter through the inflation numbers. And if and when the government allows even a marginal increase in the fuel price – which is long overdue – inflation will further rise.
The government continues to pay lip service to efforts to streamline expenditure and deal with major policy issues that need to be addressed to solve the economic crisis in Zimbabwe.
But there is no evidence of commitment. Parastatal reform is still to be implemented as there is no sign that government has wielded the axe on non-performing executives of companies that continue to operate dismally.
A case in point being the mismanagement at the national airline where an aircraft is allowed to fly more than 6 000km with a single passenger. The National Railways of Zimbabwe (NRZ) continues to wobble on the rails, while the state fixed telephone operator is failing to meet demand. The Zimbabwe Iron and Steel Company has yet to attract serious investors willing to recapitalise the company, and the national oil company has failed to ensure a steady supply of fuel to the nation.
Much-talked-about turnaround plans at Air Zimbabwe and NRZ have yet to see the light of day despite several public statements of intent from the parent ministry.
Unless the country reaches some understanding with multilateral lenders, it will not experience any significant inflows of hard currency. Given fiscal delinquency, there is no hope that the IMF, which has a high-powered team in the country at present, will give Zimbabwe a respite over its arrears.
Indications are that the country will be given yet another chance to redeem itself and in the process delay further its re-admission to the international fold.
A natural consequence of the crisis in Zimbabwe is slowly having a negative effect on investor perceptions of the region. Nervous investors might shy away from the region because of the contagion effect of the economic and political crisis in Zimbabwe.
Many believe that the central bank governor has good intentions to revive the economy and steer it towards a sustainable growth path. The unfolding tragedy however is that he desperately needs support from the government to ensure the successful implementation of his policies. That support seems to be lacking.
Public support of the governor’s policies by the government is not matched by practical measures to ensure the country overcomes the current problems.
If anything, the conclusion many people are reaching is that the governor is now a lone voice in the fiscal wilderness.
No amount of lofty ideas and promises of trillions of local currency for companies, parastatals and city councils will mask the fact that the government seems to have run out of ideas on how to salvage the little that is left of Zimbabwe’s economic future.