HomeBusiness DigestThe curse of Friday the 13th

The curse of Friday the 13th

FOR the superstitious, swearing in the Cabinet for the inclusive government on Friday the 13th was a bad idea.

The day is associated with bad luck and as such, nothing good is expected to happen on that date. This particular one was no exception.

An event which was supposed to boost public confidence in the new administration was marred by reports of more than the agreed number of people turning up for the ceremony and the arrest of Roy Bennett.

Thank goodness a government was still sworn-in albeit against the backdrop of mixed reactions within and outside the country.

Evidently, the would-be donors and investors in the West remain sceptical.

They want to see the government work first before resuming aid.

This reflects a change in approach to their earlier calls for a properly elected administration to be in place as a precondition for assisting the country.

The country’s leadership now has to get all things right in order to win back lost confidence.  

The African Union and Sadc hailed the formation of a government as representing the success of African diplomacy.

For once, an African problem has been solved within the continent.

In other African countries the conflict could have easily degenerated into a civil war.

To many Zimbabweans, as evidenced by the thousands who thronged Glamis Stadium to listen to the Prime Minister’s inaugural speech, reports of celebrations across the country after the deal was sealed and the unanimous support of an amendment to the constitution by the usually polarised members of the two houses of parliament, the negotiated settlement offers a rare chance to change things for the better.

Clearly, a negotiated settlement is not the most ideal but rather a practicable route to addressing the economic descent the country has suffered noticeably over the past decade.

The country thus has a lot of catching up to do. While it was digging deeper into economic oblivion, its peers in the region have been experiencing impressive economic growth.

Most of them benefited from the recent boom in commodity prices as well as aid from rich countries.

Angola and Mozambique, for instance, came out of civil wars in the late 90s and saw their economies recovering extremely fast.

Whereas Angola benefited from rising oil prices before the recent slump, Mozambique was a beneficiary of debt cancellations and foreign aid after displaying willingness to pursue good governance.  

During the same period, the Zimbabwean economy slumped from being second to South Africa in the Sadc region. In 1997, when recent problems began to manifest themselves, the country’s GDP had reached US$9 billion, trailing behind South Africa at US$148,8 billion.

According to the International Monetary Fund (IMF) statistics, in 1997 Angola was sitting at US$7,7 billion with Botswana, Mozambique and Zambia having GDP figures of US$5,2 billion, US$3,8 billion and US$3,9 billion, in that order.

Foreign interest in the country was still high with the Zimbabwe Stock Exchange registering positive net foreign inflows.

In 1997, for example, net foreign inflows to the Zimbabwe Stock Exchange amounted to about US$36,5 million for the year.

At that time the market was capitalised to the tune of US$3,5 billion.

In preceding years the net share purchases by foreigners on the stock market had been encouraging averaging about US$40 million per year since 1994.

At this rate, the country seemed destined to continue expanding its economy with a financial system then considered to be amongst the most progressive ones in the region.

The announcement of the proposed land acquisition plan and war veterans’ payouts in August of 1997 is thought to have led to the fall of the Zimbabwe dollar in November, on what is now known as Black Friday.

Thereafter the economy went into freefall with numerous other negative events leading to a flight of foreign capital.

For instance, in 1998 only US$960 000 was recorded as net foreign inflow into the ZSE. In the subsequent two years the stock market experienced net selling by foreign investors with US$11,4 million and US$24,7 million going out of the country in 1999 and 2000 respectively.

The exodus of foreign capital intensified after the farm occupations in 2000 leading to the closure of a number of companies.

Since then, foreign inflows into the region have largely bypassed Zimbabwe.

The economy has also shrunk significantly with the Centre for Global Development observing that the purchasing power of an average Zimbabwean in 2005 had fallen back to 1953 levels.

With most people in Zimbabwe worse off today than they were in 2005, in real terms, the country must have gone back to levels obtaining in the early 1900s.

The country’s regional neighbours have, by contrast, seen tremendous growths in their economies.  
The GDP of Angola, for example, is estimated at US$96 billion in 2008 thanks to the petrodollars.

Botswana projects a GDP of US$13,8 billion during the same period while Mozambique and Zambia expect about US$9,8 billion and US$15,2 billion.

Authorities in Zimbabwe project a GDP of US$5,5 billion but the latest IMF statistics put it at only US$600 million in 2007.

In embracing the inclusive government, whatever its glaring shortcomings, many in the country hope it may at least stop the decline, or better still reverse the trend.

It deserves to be given a chance, albeit with a pinch of salt, after all there is no known civil alternative on the table.


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