Zimbabwe struggles with faltering economy and political turmoil

Zanu-PF’s electoral victory 12 months ago has led to a worsening economy

Zimbabwean president Robert Mugabe’s government has given mixed signals on plans to seize majority stakes in foreign-owned companies as part of its indigenisation policy. Photograph: EPA/Aaron Ufumeli

Zimbabwean president Robert Mugabe’s government has given mixed signals on plans to seize majority stakes in foreign-owned companies as part of its indigenisation policy. Photograph: EPA/Aaron Ufumeli

 

It is one year since Zimbabwe’s general elections and the political stability and economic development the country’s citizens hoped would emerge following the poll has failed to materialise.

Indeed, the situation on both fronts appears to be worsening rather than improving, with Zimbabwe’s economy heading towards recession and its two main political parties beset by internal turmoil.

Zimbabweans were promised by President Robert Mugabe’s Zanu-PF party that a victory for it in the July 31st election last year over the Movement for Democratic Change (MDC) would provide the stability needed to implement its economic turnaround policies.

In the four years that followed the 2009 powersharing deal between Zanu-PF and the MDC, Zimbabwe’s economy was pulled back from the brink of collapse, but the two parties’ inability to work together undermined chances of significant growth.

Mixed signals

But in the 12 months since Zanu-PF secured its overwhelming electoral victory the economy has reacted badly to the policies the ruling party has been trying to implement.

Mugabe’s government has given mixed signals on plans to seize majority stakes in foreign-owned companies as part of its indigenisation policy. This has undermined investor confidence, which is needed to make a dent in the country’s 80 per cent unemployment rate.

According to local researchers the foreign currency needed to pay wages – Zimbabwe abandoned its own currency in 2008 due to hyperinflation – and buy imports has also dried up, and those factories managing to stay open are operating at just 40 per cent of capacity.

The Zimbabwean Standard reported recently that the manufacturing sector “was dead, with the country experiencing over US$1.5 billion trade deficit in the first half of 2014”.

In its 2014 first half economic analysis for Zimbabwe, Econometer Global Capital said Zimbabwe’s growth averaged just 1.8 per cent and it was due to worsen in the second half of the year.

“An average of two medium-sized corporates, five small enterprises and 0.5 large corporates close shop every month in Zimbabwe with smaller towns the most affected by de-industrialisation.

This calls for the nation to urgently revise policies which directly and significantly impact negatively on the job creation prospects which includes the blanketing indigenisation policy,” says the report.

MDC MP for Bulawayo Eddie Cross wrote recently that since July 2013, 23 per cent of the country’s commercial banks have either ceased to operate or have been placed in receivership with the total loss of depositor’s funds. All other banks report high levels of non-performing loans.

He accused Zanu-PF of being the architects of the country’s economic decline by appointing people to key government positions who had nothing to offer in terms of ideas or energy.

“The population is in full retreat back into the informal sector and survival mode. Hundreds are leaving the country for greener pastures, and the State and all local authorities are close to becoming dysfunctional,” he wrote on his website.

Ageing leader

Mugabe’s ailing health has also led to an escalation in the internal power struggle in Zanu-PF which means the attention of two main factions – competing to position themselves to benefit from the 90-year-old’s inevitable demise – is not fully on the economy.

However, Cross’s MDC appears to be in no position to capitalise on Zanu-PF’s growing internal divisions. The party has split in two recently over leader Morgan Tsvangirai’s refusal to step down following his electoral defeat last year.

That was his third electoral defeat in a row. And shortly after the poll there were calls from senior colleagues for him to allow fresh leadership to take the party forward.

Tendai Biti, the party’s former secretary general, has since broken away to form the MDC Renewal Team, which he says “seeks to rise above the mediocrity and failure of the post-liberation movement MDC-T [Tasvangirai].

“Tsvangirai, like all dictators, will never know the flashing lights for their departure. So he will continue carrying on and driving himself to ultimate oblivion,” he said in a recent interview.

In an attempt to buy time, Zanu-PF is now calling on Zimbabweans to “endure” while their economic blueprint, the Zimbabwe Agenda for Sustainable Socio-Economic Transformation, is implemented.

However, that might be expecting a lot of the beleaguered population, as the party has also admitted it could take 40 years to reap the benefits of the policy.

 

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