Sound economic policies critical

A positive trend in Zimbabwe general elections is the increasing realisation by participating political parties that what sells to the electorate are sound economic policies.

Zimbabwe Independent Editorial

We are not fully there yet, but if the recently-concluded elections are anything to go by we have made a positive start despite a renewed crisis in the markets following disputed results.

The two main contestants, Zanu PF and MDC-T, both put the economy as their best foot forward.

The winners, Zanu PF, had as the title of their manifesto Taking Back the Economy while the MDC-T had its Juice (Jobs, Upliftment, Investment, Capital and the Environment). While Zanu PF may be congratulated for winning the political contest, for this victory to have meaning the party needs to score on the economic front where its record has been disastrous, to say the least.

If the elections were rigged, as the opposition alleges, time may or may never tell.

Fortunately, an economy cannot be rigged. The results of any economy speak for themselves. Key indicators of any economy tell you the state of its health, and ours has symptoms of the onset of economic malaise.

Our GDP growth rate, at 4,4%, is below par. Because of little manufacturing, our trade deficit now stands at US$3,6 billion, stemming from imports of nearly US$7,5 billion.

While still on imports, respected economic forecasters Business Monitor International had this to say about Zimbabwe in their latest report on the country: “Zimbabwe’s current account will remain in deep deficit until such time as foreign investment flows help finance a recovery for the domestic manufacturing industry, thus weaning the economy off its dependence on imports.” The country is overrelying on imports, including food.

Critical to boosting business is our benchmark interest rate which has for long been at more than 14% compared to 5% and below in other countries.

As if the private sector, the engine of growth in any economy, is not squeezed enough, there is a move to increase government expenditure beyond the current and immensely unsustainable levels of 70% of the fiscus, or more than a quarter of GDP, through increasing civil servants’ salaries. As we have said, the results of an economy cannot be rigged. Even if there is some attempt to rig these, the reality on the ground speaks for itself.

We all recall when we were being told that inflation was under control and yet on a daily basis prices were skyrocketing; that we had sufficient fuel, yet there were fuel queues longer than the Nile; that we had sufficient maize and yet millions went hungry with reports from some rural areas that animals and humans were fighting over wild fruits for survival.

Of course, later international sanctions were blamed, but that was just papering over the cracks.

The fundamental problem was structural issues, macro-economic instability and an unattractive investment environment owing to reckless populist policies.

In spite of the “success” of the land reform programme, President Robert Mugabe admitted that Zimbabwe would still import food from Zambia. Now we have the indigenisation mantra, which according to Zanu PF’s manifesto has been another “success”. Indigenisation on its own cannot be the engine of growth.

Zanu PF needs to come up with a cocktail of sound economic measures which address the underlying economic fundamentals and steer the country out of an imminent new economic crisis.