HomeOpinionMugabe’s backtracking harmful for economy

Mugabe’s backtracking harmful for economy

ONLY a week ago, I acknowledged significantly positive declared intents in President Robert Mugabe’s inauguration speech.

Although some of its contents did not augur well for the much-needed recovery of the economy, it contained some statements which, if pursued and implemented, could create the foundations of an economic turnaround. This would in turn progressively diminish immense poverty nationwide.

However, counterproductively, since then various presidential speeches have been markedly at variance with some of the declared policy intents. In less than a fortnight expectations of constructive changes have been negated or destroyed.

Hope of an economic upturn have been erased with most businesses once again anticipating demise, all hopes for substantial foreign investment inflows have been overturned.

In his inauguration speech, Mugabe dealt with the critical issue of Zimbabwe’s international relations which undoubtedly are a prerequisite (amongst other things) of major inflows of foreign investment into the country.

For many years those relationships have been very confrontational, volatile, and negative, save with a select few countries primarily in the Far East. The tension and confrontational relationships with many of the developed countries have been a major hindrance to the procurement of developmental aid, investment, and restoration of money-market stability.

Thus it was most stimulating and heartening when Mugabe, in his inauguration speech, said “we seek friendship across geographies… we seek partnerships with all nations of goodwill”. He expanded thereon by contending “internationally and diplomatically we remain friendly and well-disposed towards all nations. We seek friendships. We seek partnerships. We seek to diversify our relations to encompass new, emerging regions in the world”.

But within less than a fortnight he sent out a totally different message, although only targetted at those countries which continue the allegedly “illegal” sanctions upon Zimbabwe, notwithstanding that those sanctions impact almost wholly and exclusively upon government, its key leadership (and their families and businesses, and upon state-enterprises, with very miniscule other adverse economic consequences).

Mugabe, at variance to his aforementioned policy-declaration intents, has stated Zimbabwe will now exact retribution for those sanctions by expropriating Zimbabwean businesses, and their assets, owned by investors from those countries.

He alluded to so doing being a “tit-for-tat” retribution for the sanctions imposed by the governments of such investors, notwithstanding that the sanctions were not imposed by the diverse owners of the businesses.
The inevitable consequences of his threat would be the non- extension of lines of credit to the financial sector and to other enterprises, and yet again Zimbabwe will be in breach of international law and of many of the Bilateral Investment Promotion and Protection Agreements to which it is party.

The tragic consequences will also be greater non-accessibility to state-of-the-art technologies, contraction of exports and increased reliance upon imports (which Zimbabwe is unable to fund), further unemployment and worsening poverty. There will be further reduction of inflows to the already bankrupt national fiscus.

Subsequent to his inauguration, Mugabe also recognised the need to restore viability to Zimbabwe’s industrial sector, and to target not only recovery, but also growth. In doing so, he placed especial emphasis upon achieving restoration of Bulawayo’s industrial sector, stating that the magnitude of decline of the city’s manufacturing enterprises has transformed the town into a scrapyard. He said as a result, one of the key issues to be intensively and constructively pursued by his government will be the resuscitation of Bulawayo’s companies.

But only a few days later, he backtracked, stating Bulawayo and Harare must look to the MDC-T to achieve the much needed industrial recovery, instead of government.

Undoubtedly, his policy reversal was driven by bitterness and resentment that Bulawayo and Harare are areas that failed to give him and Zanu PF with the majority vote that he and his party achieved elsewhere in Zimbabwe.

But in so doing he fails to recognise that he and his government are constitutionally and democratically required to govern the country in the best interests and wellbeing of all Zimbabwe’s inhabitants, and not only those who voted for him and his party.

Mugabe also disregards the fact that no political party, including his own, has the diverse resources necessary to achieve the economic recovery of any region, or of Zimbabwe as a whole.

Only central government is able to implement the policies, actions and access to the required resources necessary for economic recovery, be it nationally or in respect of any of the country’s regions, save for governmental administrative devolution to the provinces.

Concurrently with his enunciations at pronounced variance to those he made over the preceding few weeks, he has reiterated some declared policies which will continue to frustrate development.

Foremost among these counterproductive policies is the determination that indigenous Zimbabweans must own not less than 51% of all mining operations. None can authoritatively dispute his rationale that Zimbabwe’s vast mineral resources must benefit Zimbabwean substantially. But Zimbabwe cannot have its cake and eat it too! — for it is unrealistically obtuse to expect non-Zimbabweans to provide the required capital resources (which Zimbabwe does not have), the operational technologies, and much else, but be given minority equities.

Despite the great extent of Zimbabwe’s quality mineral resources, the 2012/2013 Survey of Mining of the renowned Fraser Institute assessed that as a desired mining investment destination Zimbabwe ranks 91st out of 96 countries (and is now one of the 10 least attractive jurisdictions for mining investments).

The negative reaction of the surveyed mining sector investors was concisely summarised by a respondent who said “black empowerment and political uncertainty make large or long-term investment impossible; no rights of ownership, no rights to enter required professionals, corruption is high, border restrictions — unstable future”.

The extent government demands a multitude of payments for the nation’s mineral resources is incomprehensible. It requires claim registration fees, mining licence fees, royalties on all exploited minerals, income tax on profits, withholding tax on all dividends payable to the investors, over and above diverse other imposts.

No credible investor is unwilling to have indigenous co-investors, but would resist being accorded minority status, no authority and security, and excessively diminished returns. Mining can be key to Zimbabwean economic growth, but not if government persists with its present policies.

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