Financial matters: Zim’s woes man-made

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WHEN man-made disasters correlate with natural phenomena, there can only be one outcome: total collapse of whatever is in question.

Malcom Sharara

Such is the case for the Zimbabwean economy, where the man-made policies spearheaded by President Robert Mugabe are positively correlated to what nature has bestowed on the southern African country. This year there is going to be drought in Zimbabwe, and this at a time when government does not have a budget to import maize.

That Mugabe’s policies have been largely disastrous cannot be disputed by anyone in the know. You only have to look at the potential the country has and compare it to what it has achieved, to see how far the current government has taken the country downhill.

Examples of economic decline abound. There is talk of the collapsed manufacturing sector now operating at a capacity utilisation level of about 36%. The unemployment rate is as high as 95%. At least nine banks have closed since 2011, two of them this year.

Two more banks have closed shop. According to the Zimbabwe Banks and Allied Workers Union, more than 1 000 jobs have been lost.

It is really sad that as Zimbabweans we acknowledge and welcome the growth of foreign direct investment (FDI) to US$410 million in 2014 up from US$65m in 2009, when Africa received as much as US$281 billion in FDI investment during the same period.

One of the Mugabe policies that has brought nothing but cheap shoes and clothing that might not even last a day on your back is the Look East Policy. While other African countries are getting the bulk of their FDI from the West, Zimbabwe is getting nothing from the favoured East.

According to Executing Growth, EY’s 2014 Africa Attractiveness Survey, the UK leads investment into the continent with 104 projects, while the US fell from joint first place to second place with 78 projects.

South Africa, the third-largest investor, directed 63 investment projects into the rest of Africa. With such statistics, how then do you justify a Look East Policy?

It is deeply troubling that at a time when Africa is seen as the second most attractive investment destination in the world, Zimbabwe is being ranked among the most unattractive mining destinations. This is according to the latest survey by Canadian think-tank the Fraser Institute. In the 2014 Annual Survey of Mining Companies — which canvasses the views of mining executives from around the world — Zimbabwe is ranked 118 out of 122 jurisdictions.

While most Zimbabweans have managed to weather the storm and hang on through the hard times, the scary thing is that worse is yet to come.

The tobacco farming season, which has been touted as a beacon of success for the land reform programme, is slowly losing steam. This year, overall output is not expected to surpass the 216 million kilogrammes that were achieved last year.

Nature seems to have burst the tobacco bubble with heavy rains negatively impacting production of the country’s biggest export earner. Andrew Matibiri, general manager of the Tobacco Industry and Marketing Board (TIMB), said unusually heavy rainfall in December had hampered production, adding that Zimbabwe’s tobacco crop will fall to 190 million kg this year, down from 216 million kg in 2014.

Faced with the prospect of going home with nothing to show for their sweat, tobacco farmers disrupted auction on the first day of Zimbabwe’s marketing season as prices for the country’s biggest agricultural export plunged. Although prices have since improved, they are still below last year’s levels.

Statistics from the TIMB show that the average price per kg of tobacco has declined by 17,80% to US$2,25, compared to US$2,74 per kg during the same period last year.

Talking about food, this year Zimbabweans are going to starve with government having already declared 15% of the food crops planted this season as complete write-offs. What is however more scary is that on its own, government is unable to raise the cash needed to fund the grain deficit. — Fin24.

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