FORMER Finance minister Tendai Biti has warned Zimbabwe’s economic recession will last for at least 15 years if urgent remedial steps are not taken.
In an analysis of the economy to the Zimbabwe Independent (See Page 14), Biti said the recession, likely to deteriorate into a depression, is already evidenced by the current economic malaise that includes dwindling government revenues and widespread unemployment.
“The evidence of this recession, which will no doubt deteriorate into a depression, is seen in the persistent deflation, the huge current account, falling government revenues, dwindling capacity utilisation, absence of capital and massive unemployment,” Biti said.
He pointed out that the last economic depression the country experienced was between 1997 and 2008 and resulted in the economy losing 60% of its value. Biti added that the country’s annual inflation is currently -0,001% and this deflation will fuel unemployment since there is low aggregate demand in the economy, which can lead to depression.
Biti said the indigenisation policy was a major obstacle for foreign direct investment (FDI).
“The Indigenisation and Economic Empowerment Act is doing a great deal to keep investors at bay and is saving absolutely no purpose other than to obliterate the remnants of a tired economy” Biti said. “So bad is the situation that in the first half of the year, the country only managed to attract US$67 million in FDI. Not even the Chinese or Russians are making any significant investments in the economy other than shady invitations to treat.”
He described the Zanu PF economic blueprint, ZimAsset as “easily the most technically weak, vacuous and most dishonest policy document since independence.”
Biti also said government should implement a raft of remedial measures that include the revival of production with emphasis on the supply side of the economy, addressing the sovereign debt situation, repealing the Indigenisation Act and ensuring the security of tenure and property rights.