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Death knell for economy if Mugabe wins

All that could go wrong for the economy will go wrong should President Robert Mugabe win the coming elections, economic experts have warned.

Chris Muronzi

Many see a gloomy outlook for the economy in the event that Mugabe, 89, wins the presidential poll slated for July 31.

His critics say Mugabe, who has been in power since Independence from Britain in 1980, is devoid of fresh economic policies and initiatives to propel the country into a sustainable economic growth trajectory.

More worryingly, analysts feel that Mugabe’s plans to re-introduce the Zimbabwe dollar could spell a death knell for the economy.
While the state media later attempted to sanitise Mugabe’s plans to re-introduce the Zimbabwe dollar once elected into office, many feel that his intention have been clearly spelt out.
The Zimbabwe dollar was replaced after runaway inflation reduced the local currency to a worthless piece of paper. By the time, Zimbabwe adopted multi-currencies in 2009, Zimbabweans would not accept the currency as a legal tender in many, if not all transactions, a sign economist say is a show of total lack of confidence in the monetary unit. On the investment front, economists do not see Mugabe relenting on his indigenisation policy, which compels foreign investors from owning a controlling stake in businesses with a net asset value of US$1, pushing investors to countries with friendlier investor policies.
Judging by Mugabe’s tone at his rallies so far, they say he is likely going to intensify the dreaded indigenisation policies to the detriment of the economy. This, they say, will keep the economy at bay. Others say there is little Mugabe can do to grow the economy if elected into office that he has not done in the last 33 years in power.
Commenting on Zanu PF plans to seize 51% of shareholding in 1 139 companies and realise US$7 billion cash for injection into the economy, former journalist Basildon Peta said : “It’s all very fine and high- sounding to say every company of a certain value be owned by black Zimbabweans. The only problem is that the idea is as delusional as it is stupid for it neither spurs economic growth nor facilitates that indispensable component of economic prosperity and foreign direct investment.”

As spelt out by Mugabe in his party’s elections Manifesto, the aged leader is bereft of new ideas to stimulate growth of the economy, critics say.

“In fact, we have all heard this typical Zanu PF nonsense before: nationalise and seize everything possible and everybody will live happily ever after. It’s all a dog’s breakfast. The manifesto further promises to monetise idle assets and make them productive, among many other kaput proposals. How forced seizures of equities in companies and their transference to black Zimbabweans, who will mostly be inept Zanu PF cronies, will generate substantial revenues is not explained,” Peta added in an opinion published by the NewsDay last week.

“Equally staggering is the belief that a Zanu PF government can raise enough capital to invest in idle assets and make them viable when Mugabe is doing all he can to alienate everyone who can help his regime.”

Analysts say Mugabe has reached his sell-by date as a champion for economic growth and development. In the decade to the formation of the unity government that has presided over the relatively sober economic growth to date, GDP tumbled by as much as 60% due to poor economic policies and general economic mismanagement.

Just last year, Finance minister Tendai Biti was forced to down grade last year’s economic growth forecast to 5,6% from 9,4% in the prior year.

Economists argue that the growth Zimbabwe has experienced in the past few years, is relatively higher because the economy was coming off a low base.

Bulawayo-based economist Erich Bloch said whoever is elected into office come end of July, will have to ensure that there is investment security in the country.

“The key to a substantive economic upturn is not who wins the presidential election, but what will be the composition of the next government, and will that government initiate the right actions to achieve, and maintain, that economic upturn,” Bloch said.

“Essentially, whosoever comprises that government, and who is president, will have to restore a sense of investment security in the minds of potential investors and financiers by substantively modifying the Indigenisation and Economic Empowerment policies and laws to be constructive and devoid of alienation of investor security, compliance with Bilateral Investment Promotion and Protection Agreements, realignment of taxation legislation to accord substantially with that prevailing elsewhere in the region, reconciliation with the presently alienated entities within the international community.”

Bloch added the new president would also have to constrain governmental expenditure, constructively address settlement of government’s and Reserve Bank of Zimbabwe’s considerable international and national debt , effectively restructure parastatals to ensure substantive service delivery and incentivise exports and eliminate inequitable import competition.

Should Mugabe and Zanu-PF be elected into office, the aged leader and his party may effect radical policy changes to stay in power, he said.

“The bottom line is that whoever wins the elections, the Zimbabwean populace in general, business community in particular as well as Foreign Direct Investors and the international community will adopt a ‘hurry slowly’ approach in assessing the performance and the intentions of the next government,” Bloch added.

 

 

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