FOLLOWING the unprecedented economic and political meltdown which engulfed Zimbabwe in the decade preceding 2009, economic steadying and recovery gradually began with the end of hyperinflation, against a backdrop of the formation of the inclusive government and adoption of the multicurrency regime, as well as the attendant exchange rate stabilisation.
Report by Brian Chitemba
The situation was helped by a favourable external environment, macro-economic stability brought by the multicurrency system, cash budgeting, and the discontinuation of quasi-fiscal activities by the Reserve Bank.
Given the return of political stability after a decade of turmoil and cumulative decline, the economic rebound was significant although it is now diminishing following a period of robust growth, with real gross domestic product (GDP) growth averaging some 9,5% during the 2010–11 period, sustained by strong external demand for key mineral exports and continued recovery in domestic demand.
However, real GDP growth for this year is projected to slow to 5,6% down from the initial 9,4% target, reflecting the impact of adverse weather conditions on agriculture, erratic electricity supply, tight liquidity conditions and political uncertainty.
President Robert Mugabe and Zanu PF officials have been repeating the elections chorus since 2011 as if it is the magic wand to Zimbabwe’s plethora of socio-economic challenges, ignoring passionate pleas from the corporate world that the inevitableuncertainty scares investors and undermines recovery.
Instead of heeding concerns of business, Mugabe upped the ante during the official opening of the fifth session of the current parliament on Tuesday, insisting that elections would be held in March 2013 soon after conclusion of a new constitution.
This naturally fuelled uncertainty, especially given that the constitution-making process is hotly-contested, while election dates are also a disputed issue. The quarrels over election issues and the inevitable clashes during electioneering are likely to be even more destabilising.
Mugabe, accused of running down the economy since assuming power at Independence in 1980 and now viewed as unelectable, is likely to heighten economic instability through ratcheting up his rhetoric over the controversial and disruptive indigenisation campaign.
Indigenisation is proving to be as chaotic as the land reform programme which ruined commercial agriculture and undermined the economy, triggering a tailspin.
Instead of learning something from the land redistribution anarchy to ensure indigenisation is structured and systematic, Mugabe on Tuesday chose the easy way out: blaming sanctions slapped by Western governments for undermining economic recovery.
Apart from the controversial land seizures, Mugabe’s regime adopted the indigenisation policy as its new election campaign gimmick as it seeks to lure voters and reverse the 2008 polls setback, in which Mugabe lost to Prime Minister Morgan Tsvangirai the first round of polling, while the MDC defeated Zanu PF for the first time since 1980.
The empowerment campaign, tinged with racist undertones and cronyism, is largely a continuation of Zanu PF’s policies from the 2008 polls during which the slogan was “100% Empowerment, Total Independence”. That did not save the party from defeat.
But the much-criticised indigenisation policy has been picked up and dusted while packaged as a new campaign agenda although it borders on vote-buying. The process has hugely damaged the economy as government has failed to make a clear commitment to ensure policy stability and certainty, while lifting the debilitating uncertainty plaguing the economy.
Extended periods of electioneering which the country is under have bred uncertainty, with the business sector continuing to shrink as investors fear the high political risk prior to elections. Previous elections in Zimbabwe have been characterised by political violence, intimidation vote-buying and ballot rigging.
Finance minister Tendai Biti will walk a tightrope on November 15 when he presents the 2013 budget as he is expected to play the delicate balancing act of financing critical economic sectors and funding elections despite government’s meagre resources.
Biti also said the forthcoming elections were causing an atmosphere of political anxiety and uncertainty within the public.
Economist John Robertson said the 2013 budget would be affected by elections because Biti was likely to be forced to forego priority sectors such as agriculture to raise funds for the referendum and elections.
He said the disputed draft constitution had created uncertainty, making it difficult for potential investors to even think of taking a risk by committing to Zimbabwe before elections.
Robertson suggested the coalition government should postpone elections to allow the stagnant economy to fully recover and to grow amid a huge dabt overhang of about US$11 billion. Zimbabwe is the only case of protracted arrears to the Poverty Reduction and Growth Trust, the International Monetary Fund’s vehicle for concessional lending to low-income countries.
Political analyst Chamu Mutasa concurred with Robertson saying Biti would be forced to divert funds from capital expenditure to finance polls, thus disrupting economic recovery.
“There will be a cost impact on people who depend on contracts financed by government such as construction of roads and other critical infrastructure as government would not be able to settle its obligations,” said Mutasa. “The payment of bonuses by the cash-strapped government means service delivery remains inefficient as money is being diverted.”
Political analyst Blessing Vava said elections were disrupting the economy.
“It’s very much shocking that this country has had four elections in 10 years, that is 2000, 2002, 2005 and 2008. Now the referendum and more elections are coming and this will gobble millions of dollars, while disrupting economic activity and recovery.”