via Can Zanu PF pull off Houdini act on economy? – DailyNews Live
Reviving Zimbabwe’s battered economy will not be a walk in the park for the incoming Zanu PF government, as there is so much that needs to be done.
During the campaign for the harmonised elections held on July 31, both the “winning party” Zanu PF and the loser MDC promised the electorate that they had the right remedy for the country’s ailing economy.
Since the MDC “lost” the elections, the ball is now in Zanu PF’s court to deliver on their promises.
Zanu PF promised to create 2,265 million jobs across key sectors of the economy and ensure food security.
The party also said it is targeting to create value of $7,3 billion from the indigenisation of 1 138 firms and over $1,8bn from the idle value of empowerment assets unlocked from parastatals, mineral rights and claims.
Zanu PF also promised an average gross domestic product growth rate of nine percent by 2018, up from the current 4,4 percent.
Burt making promises has never been a problem for politicians, Zanu PF included. The sticking point is implementation, and making good on such promises.
Does Zanu PF have the means to end the country’s economic stagnation?
The party’s trump card to economic glory is the indigenisation and economic empowerment programme. Critics believe the policy will actually be its biggest undoing, as it has already resulted in loss of investor confidence and capital flight.
I believe it would have to be a Houdini act for Zanu PF to deliver on its promises to the Zimbabwean populace. Even if there is the will power to deliver, circumstances and size of the task might be the biggest drawback.
One thing Zanu PF must not forget is that the country does and will not be operating in a vacuum; its recovery and growth will also depend on events happening across the globe, particularly in China and the US.
In the past two or so years emerging markets as well as frontier markets have been recording solid growth rates on the back of strong demand from China for commodities, as well as spillovers from the US’s Quantity Easing Policy.
China has been the world’s largest consumer of a broad range of primary commodities.
As a percentage of global production, China’s consumption during 2010 accounted for about 20 percent of nonrenewable energy resources, 23 percent of major agricultural crops and 40 percent of base metals.
Chinese demand however seems to have faltered, and this will take its toll on investment and exports for many countries across the globe, Zimbabwe included.
China’s slowdown in growth will have a significant impact on commodity producers such as Zimbabwe, where exports are dominated by minerals.
Plummeting commodity prices suggest that mining will not easily help Zimbabwe recover unless there are serious adjustments to the costs of production or mining.
The normalisation of monetary policy in the US is also going to weaken investments across the globe.
As of March 20 2013, the Federal Reserve under Ben Bernanke had added $2 101 trillion to the base of the US money supply since September 2008.
Much of the new money spilled into the developing world, as investors desperately sought better returns in new markets. Countries that were previously shunned by international investors suddenly received windfalls as they managed to access international capital for the first time.
This year, Zimbabwe got its fair share with the stock market recording a 39 percent year-to-date gain as at May 30 after foreign investors poured money onto the market.
With the Fed eyeing an exit from loose monetary policy, emerging markets are coming under pressure.
Bernanke has already said if all went well, the Fed would begin tapering off sometime, the party cannot last forever.
His words have echoed loudly in emerging economies as growth is already slowing, and could slow further.
Obviously this is not the kind of economy that the “New Zimbabwe” would want to contend with, as chances of a recovery will be very slim.
Foreign direct investment and loans could become scarce, which would also impact the country’s attempts to improve productivity and growth.
Looking into 2014 and probably a few more years down the line, Zimbabwe will have to move mountains to be able to make a strong growth comeback given these events happening elsewhere in the world.
In theory, the new Zanu PF government is expected to bring in much-needed stability in terms of policy formulation and implementation, and help soothe investor fears currently characterising the economy.
However, it’s no guarantee that conditions are significantly going to improve in the next two or so years.
Aside from the obvious China susceptibility and the presumed end of US quantitave easing, the country faces a myriad of domestic problems, particularly in terms of over indebtedness.
Corporate balance sheets are in a poor state and the Zimbabwean consumer is heavily leveraged, which might lead to a seize-up in domestic demand.
The country’s manufacturing sector is deeply in the red, while the mining sector is feeling the crunch of plummeting commodity prices.
Even so, the country remains extremely uncompetitive, with constraints such as aggressive wage legislation and obsolete machinery at most companies all likely to impede the recovery process.
COMMENTS
33years too late ,,implosion is comming
Quite right
Are you kidding ??? Zanu PF do not care a damn about any promises . They will do what they want and destroy Zimbabwe and the majority will starve to death.
Also quite right, although a lot of people can’t see this is going to happen.
Quote “During the campaign for the harmonised elections held on July 31, both the “winning party” Zanu PF and the loser MDC promised the electorate that they had the right remedy for the country’s ailing economy.” Unqoute.
Bitter pills. With the introduction you cannot expect anything objective from the writer
It is a wait and see game. What else can ZANU PF change which it failed to do in the last 30 years? We will not be fooled. ZANU PF has had th egospel for years. It is only the people who do not look back who can expect miracles. Miracles have happened in their time. We will wait and see what else.
When Mugabe and his cronies eventually one day go, I just do not know how the country will do with him! But I am sure we will try. Lol
Where are the REAL opposition leaders? Is there anyone out there?
People must understand that to revive the economy of Z
The problem in Zimbabwe is that they have had for the past two decades a hoodoo economy based on extreme socialism – in other words an economy which allows the privilege few to loot at will – while the remainder of the population suffers sever hardships.
The answer from Mugabe’s side is likely to be re-introduction of the Zimbabwe Dollar and flooding the people with worthless money – while the privileged few have access to foreign currency at very low exchange rates.
That method was used by Mugabe to purchase villas in Malaysia and Hong Kong and the looting would no doubt continue over the next five years.
Some politicians are more blatant looters than others – Chombo and Mpofu come to mind, but the others will soon join up. Indigestion would mean the same as the seizure of agricultural land – a few will really benefit – the people will starve because production plummeted. Same would happen in the case of commerce and industry.
The hangover will be felt in another two years time – when the economy is further destroyed by the few rapacious elite members. My pity is with the poor in Zimbabwe – there is nobody left to help them anymore.
Zanu-PF will absolutely pull of a Houdini . . . they will make all the money disappear.
Change after 33 years? That must be the Hand of God, nothing else. A real Miracle. ZANU chaiyo, kkkk kuseka nhamo serugare.
My heart is bleeding… when you go to work in a foreign country because there are no jobs at home ..it is different from doing so by choice. In the country I work right now when an employer offers you a job it is like they are doing you a favour…. We are being exploited both professionals and non professionals…. if they can rig and stay in power but share everything equally I think most people would not be worried.
Munhu unotonga nyika sokunonzi ndiwe unematitle deeds enyika sei… vana voperera munyika dzavamwe… ndizvo here zvamaitaura nguva yehonda… nhasi mava kuita sokuti ndimi matova vanaSmith vacho… vaRungu vanga vasingarovani nokuurayana pachavo… isu topedzana….zvisinei hazvo tongoona; garikai chisingaperi chinoshura.
What’s the point of going for elections when it is obvious loosing or winning people stay in power…..Midzimu yenyika yatifuratira….zvichapera riini????????????