HomeBusiness DigestElection could slow down recovery

Election could slow down recovery

Shakeman Mugari

JUST when government thought the ailing economy was improving, analysts warn that the impending election period could worsen the situation and scuttle claims of an imminent recovery.

They say that Zimbabwe’s negative international image could deteriorate further if the past election experience is anything to go by.

The analysts note that violence, a crackdown on opposition supporters and fears of vote rigging could dampen hopes of economic prosperity together with unbudgeted spending.

Political commentator Brian Kagoro said the current electoral framework creates a platform for intimidation and violence during the election period.

“The commotion usually associated with Zimbabwean elections will put pressure on the economy. The political impasse is already damaging the economy. An election marred by violence, intimidation and allegations of rigging will kill it,” said Kagoro.

“Much depends on the outcome of the elections. The electoral framework, if not changed, will worsen the economic situation. It could mean more violence, intimidation and even rigging – all of which will damage the economy.”

Experts warn that investors’ perceptions about Zimbabwe are likely to deteriorate as government embarks on efforts to intimidate the opposition, media and civic organisations.

They say the stage for another economic depression has already been set by events in recent by-elections in Zengeza and Lupane, which were largely marred by violence.

Zimbabweans in the diaspora are very reluctant to repatriate their money, saying the economic climate is unstable and they are not guaranteed political and economic security back home.

Analysts say the outcome of the elections could also have a telling impact on the economy.

They say a dark cloud will continue to hover over the country if observers feel the elections were not free and fair.

Previously the international community has disputed results, saying the elections were not free and fair. This has resulted in Zimbabwe being isolated from international forums and having credit lines withdrawn.

“If the international community think the election is not free and fair then our plight could worsen,” Kagoro said. “The history of elections in Zimbabwe is not encouraging at all. The outcome of the elections will also determine the fortunes of the economy.”

Government has been in a self-congratulatory mood over signs of recovery since the appointment of Reserve Bank governor Gideon Gono.

Gono has tried to kick-start the ailing economy with his new monetary policy statement.

Analysts however point out that this alone cannot do the trick and political goodwill is needed to accompany the monetary policy statement.

These marginal gains, political and economic experts say, could however be reversed by a marred election.

Companies too are more likely to take a cautious stance towards production as we approach the elections.

Uncertainty in the business community could lead to reduced domestic investment and production.

Tourism, which used to be one of the major foreign currency earners, is likely to ground to a halt if violence erupts again during election time. History has shown that the post-election period also offers no respite for the tourism industry.

The farm invasions that were rampant during the peak of the fast track land resettlement programme have caused a dip in tourism figures.

International tourists now regard Zimbabwe as a very risky destination.

“The tourism industry is still in the doldrums due to the country’s bad international image. The coming elections could certainly see a dip in the industry,” said a tourism executive.

“The general attitude internationally is that elections in Zimbabwe are characterised by political violence. This perception could certainly be with us during the next elections.”

As Zimbabwe draws closer to the election, which promises another gruelling battle between the opposition Movement for Democratic Change (MDC) and Zanu PF, daggers have already been drawn.

The Zimbabwean dollar has depreciated against major international currencies such as the United States dollar, British pound, Botswana pula and the South African rand.

During the week ending April 8 for example, the Zimbabwe dollar depreciated by 1,2% against the US dollar. It also depreciated by between 0,1% and 3,1% against other major currencies.

The depreciation has also caused gradual fuel price increases and the sudden hiking of commuter fares.

Transport and production costs have also skyrocketed and, according to analysts, will keep increasing unless economic prospects improve.

Prominent economist John Robertson says inflation will increase to 600% by the end of 2004, casting doubt on the Reserve Bank’s optimistic projection of 200% by December.

Robertson says the Zimbabwe dollar will plunge to an unprecedented US$1:$18 000 during the same period.

He has also warned of serious food and foreign currency shortages during the second half of the year.

Robertson said the election period would lead to more economic chaos.

“The elections will have a tremendous impact on investment. We must realise that the damage caused by the last elections is still with us,” Robertson said.

“I can foresee a serious food and forex shortage. If things get worse in terms of political violence business might grind to a halt.”

The prices of basic commodities recently also shot up drastically.

Bakers have however justified the bread increase saying they are importing wheat.

Last year Zimbabwe only managed to produce four months worth of wheat and bakers have now had to supplement this with regional imports.

“Things will get worse before they get better,” Robertson said.

Recent Posts

Stories you will enjoy

Recommended reading