Our
economy has been under severe stress and underperformance for a long time of
which the brink to ultimate collapse is nigh. The introduction of the
multicurrency system in 2009 relieved the economy from the 1997-2008 anaemia. A
coda to the economic challenges the multicurrency regime brought to the fiscal
management arena was effective planning and budgeting, something policy makers,
industry and households could not envisage with the Zimbabwean dollar as legal
tender. The stability of a firmer currency
base has worked well in many ways but the current cloud of oblivion cannot be
averted by that alone.
What happened to the agro-based economy…
The
Zimbabwean economy has for long revolved around agriculture. At some point it
was labelled the bread basket of southern Africa. Only after the post land
reform period the sector has struggled to support its own local market, a
situation that has led to the influx of food imports ranging from the basic
mealie meal to potatoes, vegetables and even eggs. The little that has been
produced locally has failed to meet demand whilst the farmers who have
benefited from the land reform have not received adequate skills support. Programs
like mechanisation have only benefited the politically connected who have even
failed to pay back funds for such initiatives. Going through such government
supported programs one could only imagine the accruals had it been transparent
and effectively implemented. To this day, the country’s financial position is
still groaning from debts emanating from these programs. Now there is even talk
of protecting such debtors and passing the cost to the already castrated
taxpayer, a scenario that can only be described as the worst case of corruption
and disgust.
The
government has even made calls to the financial institutions to provide funds
for the resuscitation of the agricultural sector but ownership complications
which has seen the 99 year lease versus tittle deeds debate and a depressed
liquidity position in most credit institutions not helping matters. There is
also an issue of trust considering the fact that most of the new farmers have
defaulted on many programs that have been afforded to them before. It is the
government’s commitment to institute proper measures to avert default that can probably
arrest some of these adverse issues.
Apart
from technical issues like funding and skills, the country has also experienced
a dry weather pattern in recent years. Mechanisation programs meant to promote
initiatives like irrigation have flawed remarkably due to issues like
patronage, corruption and ineptitude on the part of policy makers.
The
national cattle herd has also depleted to low levels signalling the urgent need
of a new impetus to the agricultural economy.
The new economy base...
The
demise of the agricultural sector has shifted a lot of focus to mining as the
last frontier of hope. Mining has become one area of pride in a gloomy economic
state with a lot of boastful remarks from some policy makers on how the country
is abundantly endowed with the mineral resource. After 2008 the year of the
global financial crisis most nations took to commodities for a safe haven and
discarded the financial instruments that had sent them crushing. This pushed up
prices for the commodity prices. The rise in prices enriched commodity bearing
countries and the effects inspired growth within Zimbabwe. The fairy-tale run
coincided with the formation of the Unity government and ironically ended when
the accord expired and opened its way to elections. Gold between 2009 and 2013
reached an all-time high of $2,000.00 an ounce with other metals such as
platinum and diamonds flourishing in the international market contributing to
growth within the Zimbabwean mining sector economy and a turnaround in fortunes
for many mining companies. The rise of the mining sector inspired growth in
other sectors like finance.
2013
became a year of mixed fortunes with decisive elections which ensured a ZANU
victory, the introduction of the ambitious ZIMASSET, full rollout of the
indigenisation policy, and fall in international commodity prices which was
perhaps not foreseen and prepared for.
Due
to the fragility of confidence in the Zimbabwean economy, or lack of it, the
financial sector has suffered from a domino effect with most banks closing
shop. The surviving ones have rescaled their operations with the credit market
being the worst hit. Due to problems in primary sectors like agriculture and
mining, liquidity challenges have worsened tearing the financial system apart. The
effects of Zimbabwe’s shrinking economy which has seen growth prospects cut and
deflationary symptoms creeping, is taking a toll on government revenue. Instead of dealing with
causes the government has gone further to devise new ways of milking businesses
and households through tax. The mining sector has seen royalties reviewed
upwards and this has extended to duty on a number of essential imports by
businesses and individuals.
…and then
Many
moons ago there has been a number of deals signed with China and Russia but
nothing tangible has materialised to this day. China is facing its own domestic
problems. Industrial output in the Asian giant has registered a decline and the
situation has not been all rosy with its stock market which has lost close to a
quarter of its value this year alone. Russia is not spared either. The Kremlin has
suffered a wave of Western sanctions as a result of its alleged involvement in
the Ukrainian crisis. This, coupled with its other domestic and international
commitments has placed a heavy cloud of doubt on the implementation of the two
nation’s Zimbabwean projects. Aliko
Dangote has been in the country expressing keen interest to invest in the
country but implementation of deals is what the country desperately seeks.
There is need for the country to focus on agricultural investment as well, as
it is one sector that can raise economic hopes but experiences of the past
where property rights are trampled upon will never make this task easy. All in
all emphasis on technology is important to make the economy a well-oiled
machine.
