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Zimbabwe: No happy returns

EIGHT months after being swept back into office in a landslide election victory, President Robert Mugabe’s administration is under siege.

By Tonay Hawkins, Economist

Hopes that the European Union would lift economic sanctions on Zimbabwe were disappointed last week when Brussels announced a meaningless reduction in the number of targeted individuals. Both the US — whose sanctions are far and away the most effective — and the UK said they had no intention of easing their restrictions.

Government officials were forced to admit that the treasury does not have the money to pay an (unbudgeted) pay hike to public servants promised by Mugabe during the election campaign. And the media, spearheaded by a normally lapdog state media, published a series of embarrassing revelations of gross financial abuse by parastatal heads.

The detail and accuracy of the revelations left no doubt that someone in a position of authority was leaking the numbers. Unsurprisingly, the public outcry against the vastly inflated salaries and allowances top parastatal managers and boards are paying themselves quickly degenerated into yet another row between the two factions within Zanu-PF vying to succeed the 90-year-old Mugabe.

The perceived front-runner, vice-president Joice Mujuru, blundered when she attacked the media for causing dissension in the country by publicising the “salarygate” scandal. The media, even those controlled by the state, turned angrily on her, much to the glee of the rival faction led by justice minister Emmerson Mnangagwa.

Opposition MP Eddie Cross — a voice crying in the wilderness if ever there was one — says: “Every ministry, every state enterprise is rotten to the core, packed with people appointed not for their capacity and ability but for patronage purposes.”

That is an exaggeration — there are some principled, honourable, parastatal executives and board members — but salarygate illustrates just how widespread the problem now is.

It does not help that, according to media reports, US$1m was being spent on Mugabe’s 90th birthday celebrations in a country where, according to World Bank data, the average family is poorer than it was 50 years ago.

“As a country we have lost our moral compass,” laments Cross, while admitting that his own party, the Movement for Democratic Change, is in a mess, led by a man, Morgan Tsvangirai, with a disconcerting track record of failure yet determined to hang on to his job at all costs.

During the ill-fated four-year national unity government (2009-2013), decision-making was invariably undermined by partisan splits within the three-party government. In 2014, though a single party is in power, decision-making remains just as partisan as the two factions vie for public support ahead of the succession vote at Zanu-PF’s next congress in December 2014.

As the president flew out to Malaysia last week for yet another eye cataract operation, according to officials, rumours and reports of his fading health resurfaced. All but a diminishing circle of Mugabe loyalists agree that protracted uncertainty over the succession is hurting the country as ministers in the two factions jostle for position in the next administration.

While the politicians fiddle, Zimbabwe burns. As hopes for any sort of deal with the International Monetary Fund (IMF) recede, so Zimbabwe is becoming increasingly reliant on a handful of friends, especially China. Finance minister Patrick Chinamasa says he hopes to tie up a comprehensive financing (rescue) package with China within the next three months. Perhaps this time China will rescue Zimbabwe; in the past it has flattered only to deceive.

Whether the financial support comes from China or Russia (in a mooted platinum base metals refinery) matters little so long as it takes the form of borrowed finance — not equity — thrusting Zimbabwe more deeply into foreign debt (115% of GDP and rising rapidly).

Without an IMF deal leading to eventual debt forgiveness, economic growth will continue to be hamstrung, not by economic sanctions, as ministers and many business people claim, but by an unsustainable debt burden.

Just as something will have to give politically — the current “factioneering” will further undermine governance, vividly illustrated by salarygate — so too economically.

If the Chinese do not come to the party soon and in a big way, the current economic malaise will deepen. Growth at 3,5% in 2013 was the slowest since dollarisation five years ago. Unemployment, already well over 50% of the workforce, will rise inexorably, the brain drain will intensify and living standards fall further.

The difficult economic decisions that should have been made over the past five years are not going to go away. Nor are they likely to be taken while ministers and officials, in fear of losing their jobs, squabble over the succession. It is time to draw a line in the sand and move on.
This article first appeared in the Financial Mail.

Tony Hawkins is a prominent economist and lecturer at the University of Zimbabwe.

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