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Zim economy in more trouble

At a presidential shooting competition last week, President Robert Mugabe had good news for the troubled nation: the economy is recovering.

Chris Muronzi

While Mugabe is convinced the troubled southern African country is in recovery mode, all indications point to an economy in serious trouble.

Speaking at the ceremony, Mugabe assured the nation that the economy was on the recovery path thanks to measures put in place by his government to guarantee economic revival and steps adopted to eradicate malperformances in its institutions.

While various measures would be put in place to stimulate the economy, Zim-Asset, an economic blueprint adopted by Mugabe’s government after a controversial poll in August last year, is touted as the major driving force.

“Zim-Asset will have all government and quasi-government institutions formulate their strategic action plans to be supervised through the Integrated Results-Based Management (IRBM),” he said.

“IRBM is a strategic management tool aimed at effectively eradicating malperformance. It focuses on enhancing commitment and duty consciousness in all Government workforce.

“I am confident that the implementation of IRBM should effectively bring about the desired success of our economic turnaround.”
But his critics say there is no such economic recovery. Instead, they say the economy is in recession and heading for more trouble.

The opposition Movement for Democratic Change (MDC-T) led by Morgan Tsvangirai has dismissed assertions that the economy is recovering as wishful thinking, saying it is sinking further in trouble.

“The MDC is totally astounded by President Mugabe’s wild assertion that the Zimbabwean economy is recovering. Every Zimbabwean knows that ever since the demise of the inclusive government, the economic well-being of the Zimbabweans has gone for the worse. The massive unemployment continues to rise unabated. Industries and business continue to close every day while service delivery remains poor. The plight of civil servants is there for all to see with the government failing to provide concrete pay days for them let alone improve their conditions of service,” said party spokesman Douglas Mwonzora.

“It is even more surprising that President Mugabe thinks that ZimAsset is working when it is clear that this programme is a monumental failure premised on an economic and political fad.”
The opposition said this is evidence Mugabe is out of touch with the reality on the ground.

Only last week Deputy Minister of Public Service, Labour and Social Welfare Tongai Muzenda told the upper house of parliament that government would no longer guarantee any fixed pay dates.

“We do not want to make false promises as the (civil service) Commission does not put the dates on the pay slips and that is going to be the case for some time until our economy has stabilised,” he said.

This essentially means government could just grind to a halt.
Between 100 and 400 workers are being retrenched every week, according to the Retrenchment Board.

But the number is feared to be higher because as much as 30% of companies laying off staff do not approach the board when trimming staff.

Most of the retrenchments are in the engineering, furniture, agriculture and commercial sectors.

This adds to the 9 000 plus workers who lost their jobs after 75 companies failed to reopen for business this year after the Christmas break.

A July 2013 National Social Security Authority (Nssa) Harare Regional Employer Closures and Registrations Report for the period July 2011 to July 2013 which shows that 711 companies in Harare closed down, rendering 8 336 individuals jobless.

Major companies that have retrenched include platinum miners Zimplats and Unki, Bindura Nickel, Spar supermarkets, Dairibord, Cairns, Olivine Industries and PG Industries.

On the revenue side, it’s the same tragic story with low industrial capacity and disposable incomes hitting collection efforts.

Revenue collections, according to Zimra boss Gershem Pasi, were a marginal 1% below target for the half-year to June. Zimra collected US$1,722 billion from a target of US$1,738 billion.

But an analysis of the figures shows that value added tax on local sales was US$231 million, 33% down the projected figure of US$346 million.

“The underperformance of the revenue head can be attributed to the fall industrial capacity utilisation which has resulted in reduced production of goods that attract VAT (Value Added Tax) and a decline in disposable incomes as some companies are reterenching, closing or failing to award meaningful remuneration increments to their employees,” Pasi said in a statement attached to the revenue performance report for the first half of the year.

Banks have cut back on lending. According to latest Reserve Bank of Zimbabwe (RBZ), on a month-on-month basis, credit to the private sector also fell by 0,1% in May 2014, from US$3 594,93 million recorded in April 2014.

“The slowdown reflects constrained lending by banks on the back of attendant liquidity challenges, as well as risk aversion occasioned by increasing non-performing loans,” said the RBZ.

This means companies have limited access to already tight capital.

Delta Corporation says lager volumes for the first quarter to June 30 fell 21% year-on-year due to continued depressed consumer demand, while revenue for the quarter dropped by 3%.

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