via Zanu PF fights ravage economy – The Zimbabwe Independent February 19, 2016
THE vicious succession fights in Zanu PF, brought sharply into focus by First Lady Grace Mugabe’s stunning attack of Vice-President Emmerson Mnangagwa last week and an equally strong response by war veterans sympathetic to the vice-president this week, has diverted authorities’ attention from critical governance issues and can only help to deepen the country’s economic crisis, analysts say.
Kudzai Kuwaza
Just as it was in 2014, when former vice-president Joice Mujuru was expelled from the party and government, the economy is likely to be the major victim of the infighting in the ruling party as the battle to succeed President Robert Mugabe, who turns 92 on Sunday, intensifies.
Then, as is happening now, government officials expended all their energy on outdoing each other politically at the expense of finding solutions to the country’s economic and social problems.
While the political fight escalates, the economic downturn which is characterised by a severe liquidity crunch, capital flight, downsizings, retrenchments and company closures, has spawned massive job loses and a decline in the general standard of living.
The instability within Zanu PF, exacerbated by threats by war veterans to go to war over Mugabe’s succession, will result in investors adopting a wait-and-see attitude at a time the country is desperately in need of investment.
As the saying goes, “capital is a coward”. It flees from poor leadership, bad policies, corruption and political instability. It shuns ignorance, disease and illiteracy.
Capital goes where it is welcomed and where investors can be confident of a return on the resources they have put at risk. It goes where there is a friendly business environment.
Economist Oswell Binha says politics affects the economy in far-reaching ways.
“The configuration of the economy in Zimbabwe is intrinsically attached to politics,” Binha said. “When the politicians fight, the economy also gets into trouble.”
He said political uncertainty has been a bane to the country’s economy for the last 15 years.
“Politics has been very destructive as politicians pursue individual interests undermining the national objective,” said Binha. “Zimbabweans are watching. They are not stupid. They will not be taken for granted forever.”
Since January at least 400 workers have lost their jobs as several companies in the textile and food sectors failed to reopen after the festive season. They join nearly 30 000 employees who were dismissed last year using the July 17 Supreme Court ruling, which allowed employers to terminate contracts on three months’ notice without paying a retrenchment package.
This is also on the back of the loss of more than 55 400 jobs as a result of the closure of 4 610 companies between 2011 and 2014 as confirmed by Finance minister Patrick Chinamasa when he presented the 2015 national budget.
The loss of jobs has led to government revenues dwindling and this has resulted in the state failing to pay its 550 000-strong workforce on time. So dire is the situation that civil servants went for the Christmas holidays without being paid their December salaries for the first time since Independence in 1980, with payment of their bonuses staggered over a period of three months. Chinamasa announced last week that the bonuses will be paid between February and May.
Government has been left reeling as a result of company closures due to a decline in revenue inflows, but Zanu PF leaders in power appear more interested in the succession fight.’
Zimbabwe Revenue Authority chairperson Willia Bonyongwe said last week that individual tax, which includes Pay As You Earn, missed the annual collections by 7% and was 15% below previous year collections at US$777,83 million.
Corporate tax, being tax on company and business profits, contributed US$424,7 million to tax revenues in 2015, which was 5% below target. The corporate income tax debt was US447,97 million at the end of December 2015, up from US$188,68 million the previous year.
Zimra missed its annual tax collection targets for 2015 by US$220 million — falling 3% below 2014 figures at US$3,5 billion, an indication of tight fiscal space.
Government’s ambitious economic blueprint, ZimAsset, hurriedly put together after the 2013 elections, is dead in the water. It is only spoken about at rallies and funerals by Mugabe and his officials.
Analysts say economic recovery has been further retarded by the incessant fights within Cabinet with the tiff between indigenisation minister Patrick Zhuwao and Finance minister Patrick Chinamasa over the gazzetting of the amendments of the Indigenisation law in December last year being a case in point.
Economist John Robertson says the Zanu PF internal strife paints a picture of an unstable and unpredictable country — factors which militate against investment.
“This is badly disturbing for investors who are looking for signs of stability before they invest,” Robertson said. “The fight among politicians is proof of amazing instability and it is going to be bad for business.”
Robertson’s assertions are backed by the country’s grim foreign direct inflow receipts for 2014.
According to the United Nations Conference on Trade and Development World Investment Report 2015, Zimbabwe’s 2014 FDI inflows of US$545 million paled in comparison to neighbouring countries in the Sadc region such as Mozambique, which received US$4,9 billion, almost nine times more, South Africa (US$5,7 billion) and Zambia (US$2,4 billion).
Zimbabwe, saddled with so many multifaceted problems, has high country, sovereign and political risk and this has kept investors at bay.
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