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Repercussions of Mugabe re-election

WELL, let’s go back a bit and start at the controversial July general elections last year. The word which mainly rolled off the wagged tongues of senior Zanu PF leaders and their supporters after the polls was “landslide” even though their celebrations were strangely subdued.

Editor’s Memo with Dumisani Muleya

Historic elections, some even cheekily claimed as they flaunted their two-thirds majority in parliament and President Robert Mugabe’s runaway victory over bitter rival, MDC-T leader Morgan Tsvangirai — notwithstanding the dodgy means by which it was achieved.

When the opposition complained and launched a court challenge they were dismissed as sore losers. Those magnanimous in victory simply said: never mind; better luck next time.

The reaction to the elections outcome was interesting and instructive. For political players, it kept pretty much to the soaring rhetoric; the major theme of the election campaigns.

Mugabe and his followers assumed the elections had settled once and for all the Zimbabwe political question because they got a ringing endorsement, implying validation of their leadership and policies.

Conversely, the opposition was in disarray and the situation could only get worse as time and events of late have proven.

Yet the biggest reaction to the elections outcome came from the economy. Given that government spending is usually reckless ahead of elections, the spike in expenditure failed to lift the economy but worsened fiscal deficits.

In the hotly-contested elections aftermath, the stock market crashed and there was a bloodbath as more than US$1 billion was lost in the process. That shook the already deteriorating economy to its foundations.

Capital flight — the rapid flow of assets and money out of the economy in this case to due to the elections outcome — intensified. Badly unnerved and anxious investors lowered valuations of their assets, ran and scurried for cover.

This was particularly damaging as it further destabilised an already struggling economy which investors are shunning largely because of hostile policies, policy inconsistency and uncertainty. Economic problems, including the liquidity crunch, low aggregate domestic demand, deterioration of the balance of payments, banking sector vulnerabilities and low industry capacity utilisation, exacerbated.

By December, the economy had begun to shrink dramatically. Hundreds of companies were downsizing or closing down, throwing thousands into the streets.

Ultimately, the situation drove the new Minister of Finance Patrick Chinamasa into an invidious position in which he even struggled to come up with a national budget, while extending the begging bowl to foreign capitals for a rescue package — all in vain.

After the festive holidays, the situation got worse as production crumbled whereas export declined and imports soared, worsening the current account deficit and ultimately the balance of payments position. Disinflation and then deflation set in.

Government revenue collections tumbled while the wage bill ballooned.

In the past few years, Zimbabwe’s economy had recovered following over a decade of a downward spiral which culminated in hyperinflation and a meltdown, but the rebound phase is now over.

Growth decelerated in 2013. Real GDP last year was estimated at just above 3%, a sharp plunge from 10,5% in 2012. The macro-economic environment remains gloomy in 2014, and the outlook is ominous.

But then, whether one likes it or not, Mugabe will remain at the helm for some time, meaning no significant policy shift and reforms. Yet it is difficult to discuss economic reform and recovery without structural and policy changes in public administration.

Reforms are seriously and urgently needed in our poisoned politics, economy, security structures, particularly the police, media, judiciary and other institutions.

The underworld nexus between politicians, corporates and mafia-like corrupt networks operating off the radar must be broken as part of combating rampant corruption.

Basically, Mugabe and his ministers are yet to appreciate the Einsteinian logic that you can’t solve problems at the same level of thinking which applied when you created them in the first place.

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