LAST week the International Monetary Fund (IMF) said Zimbabwe’s economic situation, currently plagued by inexorably slumping business activity and low capital inflows, has further deteriorated due to embedded structural problems in the economy. This calls for drastic austerity measures, which include fighting corruption and cutting the bloated civil service which stands at 550 000 to reduce the wage bill that consumes over 80% of government revenues.
By Elias Mambo
However, such drastic economic reforms, which have been suggested by the Bretton Woods Institution and economists before, have largely been ignored by Preside Robert Mugabe’s government whose political considerations always supersede economic interests.
Mugabe and his cabinet have for years resorted to populist but ruinous policies to win elections and retain power at the expense of the economy.
Besides keeping opposition parties at bay through populist policies, Mugabe, his cabinet and the ruling party’s politburo have been expending a lot of energy dealing with Zanu PF’s factional politics, fuelled by the party’s failure to come up with a clear succession plan. Mugabe has been playing a delicate balancing act to keep the factions at each other’s throats while extending his rule.
The concentration on politics has, however, come at the expense of the economy, service delivery, creation of employment and improving the livelihoods of the majority of ordinary Zimbabweans.
The IMF, which has been monitoring Zimbabwe’s economy closely in recent years, said the country urgently needs bold economic reforms that include clarity on the indigenisation policy, reducing corruption and containing the public sector wage bill to reverse the worsening situation characterised by low exports and a widening current account deficit, among other challenges.
While the IMF has recommended massive job cuts within government to curb the run-away wage bill gobbling more than 80% of the income generated, such a move means partly dismantling the powerbase which has kept Zanu PF in office for the past 36 years.
This has led to discord in government and created a disfunctional system.
As Finance minister Patrick Chinamasa battles to implement the IMF recommendations, his cabinet colleague, Public Service, Labour and Social Welfare minister, Prisca Mupfumira in a populist posture last week assured civil servants that no one will be laid off through government’s efforts to rationalise the country’s public service establishment.
Mupfumira has the support of several ministers who believe laying off workers would be disastrous for the party ahead of the 2018 elections.
Social commentator Maxwell Saungweme said the contradictions between Chinamasa and Mupfumira reflect that in the Zanu PF and government scheme of things politics always trump economics.
“It is all about making sure that their support base remains intact and is rallied behind them.
That cannot take place if radical reforms such as reducing the government workforce are considered,” Saungweme said.
“For long the economy has been sacrificed on the altar of political expediency.”
After losing the referendum on a government-backed Constitutional Commission draft constitution in 2000, Zanu PF embarked on a violent seizure of white-owned commercial farms as its main elections campaign drive.
Exploiting a legitimate historical grievance, the party used the land reform issue as an instrument to mobilise votes for the 2000, 2002 and 2005 polls, while unleashing terror across the land leaving a trail of destruction in its wake.
While the strategy of redistributing land appealed to some marginalised people, especially in rural areas, it destroyed agriculture, the economy’s mainstay, and sparked a serious food crisis which has not been resolved 16 years after the programme was kick-started.
As the land reform programme degenerated into chaos and a serious food crisis rocked Zimbabwe, Mugabe changed the campaign strategy and launched the controversial indigenisation policy to woo youths and urban voters.
Although the programme has resulted in massive capital flight and scared away investors, the government has persisted with the discredited and damaging policy, much to the detriment of the country. Economic analysts and business organisations have called for the programme to be discarded, while the IMF and potential investors, including several business delegations which have visited the country, have called for clarification and even its repeal.
Political analyst Brian Raftopoulos, director of research and advocacy in the Solidarity Peace Trust, said although the indigenisation initiative remains noble, Zanu PF has used the controversial programme to gain popularity and votes.
“By implementing this controversial programme, Zanu PF has managed to claw back some space which it lost to the MDCs in the 2008 disputed elections and increase its support base,” Raftopoulos said.
“It is unfortunate that this indigenisation policy has exposed the state itself as being in possession of a particular party and that Zanu PF has used this process to spearhead its campaigns.”
Potential investors are shunning the country at a time the economy desperately needs foreign direct investment and a fresh injection of capital given the current severe liquidity crunch and deteriorating conditions. The liquidity crunch has led to 81 companies shutting down in the first quarter of 2016, while many others have downsized or retrenched resulting in hundreds of workers being thrown onto the streets.
Mugabe’s other populist policy that saw him ordering the scrapping of utility bills before the 2013 polls has already boomeranged as it emerged that Zesa holdings and municipalities lost approximately US$3 billion in revenue as a result of that electioneering posture.
Ahead of the 2018 polls Zanu PF — through political commissar Saviour Kasukuwere who is also Local Government minister — is planning to doll out housing stands across the country as part of the party’s promises to attract urban voters.
The party has, however, failed to fulfil its lofty but empty promises made before the 2013 elections