President Robert Mugabe recently surprised South African President Jacob Zuma by admitting that the Zimbabwe economy is in a “dismal state” as reported by the Zimbabwe Independent last week.
According to Finance minister Patrick Chinamasa, in his budget statement last year in November, more than 4 600 companies had closed shop since 2011, resulting in more than 55 400 people losing jobs. The real big surprise is that Mugabe is still holding on to the notion that he can, somehow, still “rig” economic recovery without addressing the root causes which include of gross mismanagement and rampant corruption fuelling the economic meltdown.
Mugabe was hoping to “rig” economic recovery with the US$27 billion ZimAsset plan.
To put this sum into perspective, ZimAsset budget was nearly three times the current national debt of US$10 billion. Sadly for Mugabe, ZimAsset is dead in the water because no donor is prepared to bankroll such a hare-brain blueprint. Just as well, Zimbabwe is already groaning under the US$10 billion debt burden and in five years the debt would have maybe ballooned up to US$20 billion with precious little to show for it!
In August last year Mugabe was in China, on another begging mission. When he launched his ZimAsset plan before the 2013 elections Mugabe was confident his “all-weather friends”, as he flatteringly called the Chinese, would bankroll the plan. During the state visit, the Chinese partly put him out of his misery by offering US$4 billion for projects but nothing for the much-needed budgetary support. They told Mugabe to his face why; “he was a bad debtor”.
The economic crisis has continued to get worse with more company closures and more workers thrown on the already mountain high unemployment heap, forcing the regime to once again take up the begging bowl and resume the begging duties.
Last week minister Chinamasa was in Washington DC for spring meetings begging from the IMF and WB and came back with nothing in the bowl. During their South African trip, Mugabe and Chinamasa reportedly implored our neighbour to urge development financial institutions to increase their investment in Zimbabwe, particularly the Development Bank of Southern Africa and Industrial Development Corporation South Africa.
Without economic reforms and an end to the criminal waste of resources due to mismanagement and corruption, soft loans from South Africa will only postpone company closures, but sooner or later those companies will in turn close under the burden of economic collapse around them.
Mugabe thinks he can buck the system, borrow all he wants and never have to repay his debts. He is yet to learn that he cannot cheat the economy; he will have to implement the democratic reforms and then the economic reforms first – there is no way the latter can be implemented without political reforms and change.