Over the last six months I have raised concerns over the growing economic crisis facing Zimbabwe. Much of my advice has fallen on deaf ears and Zimbabwe finds itself on the verge of economic collapse.
The Ritesh Anand Column
The queues outside banks reflects a crisis of confidence. The liquidity crisis facing Zimbabwe will only get worse as people withdraw whatever little funds they have in their account fearing a recurrence of 2008.
Soon we will be faced with fuel shortages as fuel importers cut back supplies over concerns regarding payment. This will be followed by food and healthcare shortages for the same reason. For far too long we have been living beyond our means. Our imports exceed US$6,3 billion while we export US$3,4 billion leaving a trade deficit of US$3,1 billion. Furthermore we spend over US$3 billion (88% of revenue) a year on civil servant salaries leaving little room for development expenditure. Add to this corruption which has reached unprecedented levels draining the economy of income.
Zimbabwe faces its greatest economic challenge since Independence. In many ways this will be more difficult than 2008.
In 2008, the shops were empty, but our pockets were full of worthless money. Today, the shops are full, but our pockets are empty. In the absence of radical changes, Zimbabwe is destined to fail. The only hope lies in accelerating the re-engagement process with international financial institutions (IFIs) like the IMF, World Bank and African Development Bank (AfDB) to settle our outstanding arrears and pave the way for fast-track reforms backed with a financial package. Once again, government seems divided on this as some officials prefer the status quo. Let’s be clear, there are no options and we are fast running out of time. The economy cannot sustain much more and is likely to collapse if we do nothing.
While we adopted the US dollar as per the multi-currency regime, we failed to transform our economic policies in line with international best practice. You cannot expect to use one of the strongest currencies in the world while pursuing hostile investment policies. Where did we expect the investment to come from to help rebuild the economy? Why would investors even consider investing in Zimbabwe given the harsh economic environment and our poor attitude towards foreign investment?
Over the past 36 years, we have systematically and at times even deliberately destroyed the economy. In 2008, Zimbabwe was on the verge of collapse and if it weren’t for the formation of the Government of National Unity (GNU), it probably would have collapsed. The GNU temporarily restored stability and growth to Zimbabwe. Zimbabwe returned to some form of normality, but this was short-lived following the general elections in July 2013. Since then, economic recovery has stalled and it is once again on the verge of collapse. What could be the solution this time around?
I strongly believe the solution lies in IMF-World Bank-AfDB-led reform programme, including financial support. We cannot go it alone. We have run out of time and options. Most of our industries are dead, the drought has affected agricultural production and the depressed commodity outlook will lead to further mine closures. We desperately need to stimulate economic activity to restore confidence and growth.
The country also needs capital injection. In the absence of foreign directr investment, a financial package is required. The financial package will no doubt come with strings attached, but we need these strings to hold our government to account. We need to fast-track the necessary reforms to make Zimbabwe investable again. We need to create a conducive environment for investors and restore confidence in the economy. We need to remove our prejudices against the West and move forward with necessary economic reforms.
The IFIs have teams of experts in economic transformation. The changes will no doubt be painful, but necessary if we are to move forward. We need to hold ourselves and our government to account. We need to take greater responsibility for our actions and the impact it has on the lives of our people. We need to build trust and restore confidence. We need to learn to live together in peace and harmony. We need to strive to work harder individually and collectively to build a better Zimbabwe for the next generation. We cannot allow our children to suffer the same prejudices we have endured over the last two decades.
Government should also consider establishing an economic task force that reports directly to the president, comprising of business leaders, industry experts, government officials and economists to develop a short-term recovery plan to help stabilise the economy. The team can work with the IFIs to develop a strategic plan to help turn the economy around. The team should be independent and free from political interference.
It’s time to build a better Zimbabwe. It’s time to build a better future for our children. Zimbabwe has been blessed with tremendous natural resources. Our greatest resource is our people who have long suffered through economic mismanagement. Let’s turn our anger and frustration into love, and use our energy to build a better Zimbabwe. Let us be positive in our outlook and attitude.
Surely, as the rainbow appears after every storm, so too this storm shall pass and hope and confidence will once again be restored. We need to have faith that better days will follow. In the meantime, we should brace ourselves for the difficult times that lie ahead.
Note: This is the last article by Mr Anand for this paper as he is taking time out to focus on other commitments. The editor would like to thank him for his incisive and invaluable contribution on political economy analysis and debate in the country.