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Economy needs bold action

In his 2014 national budget presentation, Finance minister Patrick Chinamasa claimed the country’s economy would grow by 6%.
Even for a country desperately in need of good news, the projections seemed a bit over the top.

Zimbabwe Independent Editorial

Chinamasa was last year forced to halve the projection from 6,1% to 3,1% owing to low business and investment confidence, scarce liquidity and subdued international prices for exports such as minerals, among other economic impediments.

Nothing has changed fundamentally on the economic front to warrant optimistic projections this year. Industry capacity utilisation remains at appalling levels of 36%, reflecting the problems besetting the economy.

Liquidity remains very tight with banks cutting back on lending. Companies continue to close and downsize, throwing thousands on the streets.

More than 6 000 people were retrenched between January and November last year, according to the Retrenchment Board. Chinamasa last year also revealed that 4 610 companies went under, resulting in the loss of more than 55 400 jobs between 2011 and 2014.

Against such a background, government’s growth expectations must never be plucked out of thin air, something that does not augur well for any serious attempts to stem the economic haemorrhage.

Government needs to sober up and immediately begin to make an honest inspection of the economy.

The time is long overdue for President Robert Mugabe and his team to be honest to themselves and deal with the festering economic problems.

That the economy is in trouble is beyond doubt. But instead of dealing with the many faceted causes, government continues to beat about the bush, pretending economic issues are being addressed.

For instance, experts see the economy growing by a mere 1,2% in 2015 owing to political risk. And that risk is apparent to all and sundry.

It is be clear that the growth witnessed when Zimbabwe adopted the US dollar in 2009 and which averaged 7,3% between then and 2011, owed largely to the fact that the economy was coming off a low base.

Government has targeted average Gross Domestic Product growth of above 6% informed by Zanu PF’s ambitious — some would say stillborn — economic revival plan, the Zimbabwe Agenda for Sustainable Socio-economic Transformation (ZimAsset).

But growth is likely to remain at a standstill 3,2% in 2015, against ZimAsset targets of 6,1% in 2014 and 6,4% in 2015.

The economy requires bold action to kick-start investment in mining, infrastructure development, agriculture and manufacturing, among others. Investment deals signed last year must be implemented without further delay.

Zimbabwe needs to correct the politics to restore itself as a key investment destination. Pretending that the country is a victim of an international conspiracy is no longer a plausible excuse for failure. The solution lies in working to get back into the community of nations, restoring competitiveness and more importantly, respecting property rights.

That amounts to good governance.

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