Zimbabwe waits for Mugabe to go – but economic prospects are grim

SA can certainly learn what not to do from Zimbabwe, its impoverished neighbour to the north. Under the rule of the 91-year-old Robert Mugabe and his Zanu-PF party, the slide into destitution has (barring one spurt of growth) been almost incremental. Indeed, there have been warnings at international level that the rise in unemployment and (in rising cases) actual starvation cannot continue without a re-radicalisation of the entire country. The reforms Mugabe promised when he took power 35 years ago have all failed – from forcible land redistribution to welfare. This has been partly the consequence of major ill-considered economic policies, sanctions because of human rights violations, and a failure to arrive at requisite conclusions. Mugabe said last week that he would like “re-engagement” with the West, but nothing further has been heard on this front. – Peter Wilhelm

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(News24) – Fifteen years ago a mass expulsion of experienced white farmers sent the economy of Zimbabwe into a downward spiral. The country is still struggling to recover.

One of those affected is Calvin Bembere, a former producer at the state-owned Zimbabwe Broadcasting Corporation who lost his job in July. He is now planning to scrape a living as a street vendor. The 35-year-old husband and father believes this could be the only option — but “the market is dwindling. The people who should buy from you are now jobless and do not have any source of income,” he says.

After a rebound between 2009 and 2012, with average growth rates of nearly 9 percent, growth has again slowed to an expected 1.5 percent in 2015, hit by drought and falling prices of gold and platinum, which Zimbabwe exports.

Robert Mugabe, Zimbabwe’s leader of 35 years, made a rare admission of the problems on Tuesday when he indirectly asked for help from the West, instead of blasting it as he usually does over the sanctions it imposed since 2001 over human rights abuses. Mugabe said he “values re-engagement” with the West and hopes to get assistance from the International Monetary Fund and the World Bank. The European Union lifted many of its sanctions last year.

Dozens of businesses close annually as a result of high financing and labour costs and electricity shortages. Capacity utilisation in the industrial sector languishes at 37.5 percent, according to the Confederation of Zimbabwe Industries. Experts estimate unemployment at more than 80 percent — far above the official rate of 11 percent — and trade unions say most survive in the informal sector. “In 1998, we had over 2-million workers on our books but today, we have less than 500, 000 formally employed people,” said George Nkiwane, president of the Zimbabwe Congress of Trade Unions.

Wages are so low that “almost everyone is wallowing in poverty”, said Japhet Moyo, secretary-general of the same trade union confederation. An estimated 16 percent of the population are expected to go hungry this and next year following a plunge in maize production. “I feel sorry for those who do not have any plot to cultivate. It is difficult to be jobless in a country with no social grants,” said Davison Mhaka, who runs a poultry project north of Harare.

The expulsion of 4,000 white farmers to redistribute land to about 200,000 black farmers is seen by many Zimbabweans as having allowed “black people to take ownership of their destiny”, as economist and farmer Jonathan Kudzura puts it. But the land redistribution contributed to a decade-long crisis that turned the country formerly known as southern Africa’s bread basket into a net importer of food and saw economic output cumulatively decline by nearly half between 1999 and 2008, according to the World Bank.

The agricultural sector is showing some signs of recovery, with more than 130 million kilograms of tobacco – the main export – leaving the country in 2014, according to the Tobacco Marketing Board. But farmers are not keen to cultivate maize, which the state-run cereal distributor often takes months to pay for.

Legislation requiring locals to hold majority stakes in major firms has meanwhile scared off foreign investors, said Tony Hawkins, an economics lecturer at the University of Zimbabwe. China is Zimbabwe’s top foreign investor, injecting US$2.7-billion into the country between 2010 and 2013, according to the Zimbabwe Investment Authority.

The investment legislation and land redistribution have been criticised for fuelling corruption as the government and its cronies are accused of land-grabbing and taking bribes. Economic policies “serve the narrow political interests of an elite which has amassed huge wealth in very few years”, economist John Robertson said.

In his speech, Mugabe promised to repeal laws that “hamper business” and to tackle corruption. A July ruling from the Supreme Court made sacking employees easier, leading to the dismissal of at least 20,000 people from public and private companies. The measure sparked hopes of increased labour flexibility and more foreign investment, but parliament adopted legislation cancelling it as a result of subsequent protests.

The ruling party Zanu-PF is considering bringing back the local currency — replaced by the US dollar in 2009 amid massive inflation — to ease the country’s long-running liquidity crisis. But without a strong economic basis and sufficient gold reserves, Robertson described the plans as “suicidal”. Meanwhile the ruling party’s top priority is not the economy, but rather in a power struggle over who will succeed 91-year-old Mugabe, analysts said. “The legacy of misrule of Zanu-PF … makes the task of … restoring growth immensely more difficult,” Hawkins said.

Source: http://www.news24.com/Africa/Zimbabwe/Zim-struggling-to-recover-seeks-help-from-West-20150826