AS I walked down Coventry Road, the highway that marks the northern tip of Harare’s Workington industrial estate on January 6, 2003 to kick-start my career as a reporter at The Daily Mirror, Zimbabwe was battling to ride out a relentless carnage on jobs, hyperinflation and brutal de-industrialisation.
Annual inflation hit 500 billion percent in December 2008, with money supply and interest rates barrelling towards the 30-digit mark.
Gross Domestic Product (GDP) contracted by 50% during the decade to 2008, as capital flight mounted after lenders withheld support citing aggravated risk in a country that was at war with big powers.
Sadly, it is pretty much the same situation today — tepid growth, decelerating standards of living, diminishing spending power, grinding poverty and a deadly health scare.
The only difference is that annual inflation is ranging in the hundreds, not billions, but toppling corporate empires with the same precision as Zimbabwe continues with its battle to slip out of debt distress.
But under fire Finance minister Mthuli Ncube last month promised to start ‘paying something’ to a string of frustrated lenders.
I doubt that he has the fiscal space to manoeuvre and live up to this promise — he was only grandstanding.
But he must announce something concrete when he comes up with the mid-term fiscal policy review later this month.
Back on my trip to the newsroom 18 years ago, clusters of rundown factories were carving in to the unfolding crisis as I trudged on, overcome by the weight of hyperinflation, foreign currency shortages and a power crisis.
At 622% that January, hyperinflation had reduced powerful companies into white elephants.
More would join this league as the headwinds intensified.
I remember the IMF, as it still does today, frankly telling Harare’s defiant authorities that they hadn’t seen anything yet — this was only the genesis of frustrating times ahead.
I wouldn’t believe the IMF then.
But as the global lender cautioned, Zimbabwe remains in the grip of the ramifications of the worst economic decisions in a generation — the driving force behind falling foreign direct investment (FDI) inflows and an erosion of government’s capacity to stand up to the blazing challenge.
GDP had plummeted by 8,5% in 2001, and banks were among the immediate casualties of the bloodbath.
From the finance minister, Ncube’s Barbican Holdings to the blue-chip Trust Banking Corporation and Royal Bank, they took turns to go under as volatilities spiralled.
Today Ncube’s impending policy holds the country spellbound, a country that has entrusted so much hope that as Ncube steps forward to announce the refreshed spending plan, he will measure up to the challenge.
It’s been terrifying experience.
Following a year of fragile stability brought by the forex auction system, Zimbabweans can hear the beast clearing its throat repositioning to mount another raid.
It is clear that ambitious targets announced in the 2021 national budget in November are under threat as the forex crisis continues, amplified by Covid-19 induced slip in spending power, which has relegated the ZW$421,6 billion 2021 budget (about US$5 billion) to an ordinary blueprint.
The World Bank has said 500 000 workers were sent home in 2020, as firms responded to hard lockdowns by cutting on expenditure.
There should be no room for political gamesmanship as Ncube presents himself before the legislature to announce his game plan.
A solid review of the budget is long overdue.
It holds key to addressing the hurdles that threaten an economy that was already in crisis when the virus broke out, cutting tourist arrivals by over two million in ten months and wiping out over US$1 billion.
A carnage of the same proportion rocked mines, horticulture, steel firms and other key industries, pushing GDP down 4% by December 2020.
Over 2 000 Zimbabweans have died in close to 50 000 infections, and experts are calling for increased spending on health.
“We are expecting greater expenditure on the health sector the pandemic is increasing,” economist, Stevenson Dhlamini told this newspaper last week.
This time it has not been banks that have been falling.
What’s left of Zimbabwe’s financial system and industries are the resilient enterprises that remained standing when 4 500 firms joined the graveyard between 2011 and 2013, pushing 55 000 workers out of jobs.
On Sunday, the central bank said over US$1,5 billion has been deployed to companies through the auction system.
However, it still faces multiple hurdles highlighted by market manipulation.
Last week, the Confederation of Zimbabwe Industries (CZI) gave a glimpse view of the outlook, calling on authorities to steer away from further hurting industries.
“Our key request is that the midterm budget should not unsettle the stability or the relative stability that we have experienced, but rather sustain it,” said Sekai Kuvarika, chief executive officer at CZI.
To be frank, exchange rate mismanagement has been at the heart of the ongoing turmoil.
As Ncube glides back to Parliament with another attempt to calm the jitters, defending the currency and plotting a strategy that gives firms access to cheaper US dollars will remain key.
The scale of the challenges to be addressed are beyond the capacity of a troubled third world country that has started wars everywhere.
The big powers that have been at loggerheads with Harare destroyed pretty much everything during the industrial Armageddon.
They shaved closer to the bone and there is no more strangling possible.
But any form of public planning must consider that currency decimation is the latest weapon being used to punish lairs.
In Angola, President Jose Eduardo dos Santos stepped down following a similar crisis, while the dramatic ouster of President Omar al-Bashir in Sudan came after the currency was attacked with relentless precision.
I am convinced that the new ZW$50 (about US 58 cents) note introduced last week will to maintain its current value for a long period.
To drive the country back to stability, the upcoming plan must outline solid strategies to support the RBZ’s exchange rate management.
It is a big issue.
Government has made preposterous statements about reengagement since the coup in 2017.
On the ground, there has been very little progress.
Reengagement unlocks balance of payment lifelines.
Of the ZW$421,6 billion budget, donors would chip in with about 10%, which is just over ZW$40 billion (about US$470 million).
It also gives investors’ confidence and unlocks FDI.
There is absolutely no reason why with its vast lithium, chrome and platinum endowments, Zimbabwe must generate US$500 million FDI per annum, only 10% of US$5 billion flowing through some SADC destinations.
Reengagement reduces the unsustainable country risk profile that has held lenders back.
In fact, instead of struggling to find the ZW$18 billion (about US$210 million) Covid-19 rescue package and the ZW$500 million (about US$6 million) tourism revolving facility announced last year, focus should have been on scaling up genuine engagement, after which capital would start flowing.
The ZWL$2,3 billion budgeted for spearheading industrialisation was a waste of time, frankly, because the broke government has no capacity to champion such interventions.
Then there was Ncube’s plan to bring back heaps of mangled steel at the Ziscosteel graveyard, which is just another wild dream.
Ziscosteel must now be allowed to rest in peace.
It fought its fight before it was looted and abandoned at the turn of the century.
It is beyond redemption.
Raising ZWL$1 billion (about US$12 million), as planned, to ramp up output in SMEs would make sense.
But this must be executed before currency depreciation and inflation eats into government’s capacity to raise funding.
At about 160%, Zimbabwe’s annual inflation sounds manageable because it once reached 500 billion percent.
But this is extremely high.
A colleague who recently travelled to the Zambezi Valley told horror stories of a community at the crossroads.
They get a bus service only once every two weeks.
There has been so much misinformation about road rehabilitation programmes.
Potholes have been patched here and there in urban areas.
That is really a good start but it is a fraction of the work at hand.
Real work starts once Ncube and his team budgets to repair roads and bridges that network communities behind the major highways, which support the rural economic system.
It was surprising that he allocated ZWL$131,4 million (US$1,5 million) towards resuscitating old mines.
Instead, this should have been deployed towards rebuilding growth stimulating infrastructure.
The long planned privatisation drive would then unlock private capital into these mines.
Bold moves must be made to reverse public consumption patterns.
Allocating ZW$131,6 (about US$1,5 million) of the budget (5,5% of GDP) toward capital projects demonstrated serious planning deficits in government, especially after considering that ZW$290 billion, or 12% of GDP was channelled towards recurrent expenditures, which include booking expensive hotels and buying exuberant cars for civil servants.
The hope to create 150 000 formal jobs this year went up in smoke when Ncube failed to fund enough for capital expenditure.
So was his ambition to improve GNI per capita to US$1 835 this year, from US$1 156 in 2020.
Under the circumstances, a serious Finance Minister would immediately pour resources to vulnerable groups and avoid punishing businesses through harsh taxes and punitive fees.
Increasing funding towards the ZWL$300 (about US$3,50, which is a joke) per household monthly stipend should become an important feature of the upcoming blueprint.
So should expanding the population targeted for funding.
Considering the scale of currency decimation and rocketing prices, the ZWL$98 million (about US$1,1 million) budgeted for this expenditure head has been eroded.