via Economy chokes Zanu PF – DailyNews Live by Thelma Chikwanha 13 MAY 2014
In a bid to avert a looming economic crisis the ruling Zanu PF government is launching a new economic offensive.
Officials say in this fresh strategy, the ruling party will no longer be focused on robustly indigenising foreign business — as enunciated in its manifesto and economic blueprint ZimAsset — but it will aim at attracting foreign direct investment and subsequently the expansion of production capacities in the industrial sector.
Zanu PF has released two clues of its increasingly troubled position on the economy.
The party yesterday convened an emergency politburo meeting to coordinate a response to the deepening economic crisis as business analysts predicted Zimbabwe’s economy would get worse towards the end of the year with economic activity suffering from increasing government interventionism and production bottlenecks originating from the liquidity crisis.
The meeting came hard on the heels of an admission by Finance minister Patrick Chinamasa at a business conference at the Zimbabwe International Trade Fair (ZITF) of the grave challenges afflicting this tiny economy.
“We are confronted with an economy which is heavily indebted, that is a reality I am facing, whether it is China or Malawi or the Bretton Wood Institutions (IMF and World Bank),” Chinamasa said.
“We must be cognisant of the fact that the country needs foreign direct investment. So, we must come up with policies to attract FDI.
“To be honest with you, I’m grappling with the cause of the liquidity problem in the economy. Is it a political issue or an economic issue?”
Just last week, newly appointed Reserve Bank of Zimbabwe (RBZ) governor John Mangudya, in his acceptance speech, warned that the lack of liquidity and its limited circulation within the economy “remains the biggest immediate challenge that the Zimbabwe economy is facing.”
While some hawks in Zanu PF were said to be lobbying for the return of the Zimdollar, Mangudya advised that the multiple currency system needed to be buttressed and maintained to restore and enhance confidence and credibility.
“The multiple currency system is sine qua non for turning around the fortunes of the economy,” he said.
Mangudya, described by Chinamasa as a “Keynesian economist”, said Zimbabwe needed financial discipline amid concerns that government was squandering millions of taxpayers’ money on luxury vehicles, expensive hotels, banquets, advertising and other wasteful expenditure.
The profligate spending indicated government was “out of touch with economic realities in Zimbabwe,” analysts said.
And to buttress the point, Mangudya said there was need for “discipline to utilise our resources efficiently, discipline to know that we need to increase production before we increase consumption,” adding that there was need for the country to refrain “from living beyond our means, as this would bring greed and corruption.”
Mugabe, who won a July 31 vote to extend his 34 years in power, is struggling to breathe new life into an economy that contracted by 40 percent between 2000 and 2008 after a controversial agrarian revolution that slashed exports, and skyrocketed inflation to record highs and strained relations with the International Monetary Fund and other multilateral financial institutions.
“The past three years have been challenging for the Zimbabwe economy and difficult for many Zimbabweans,” the new RBZ boss said.
“People cannot find jobs, companies cannot pay each other as well as servicing their loans with banks, tax revenues are going down and the tax base is narrowing.
“The economy is weaker and the financial system is depressed. We need to be courageous and skilful to manage the situation on hand,” he said.
Over the past two months, government has failed to pay its workers and pensioners in time, and has relied on Value Added Tax to bankroll salaries.
The tax collector Zimra has also trawled company accounts looking for outstanding obligations to finance government expenditure.
The ruling party’s economic blue print Zim Asset, which proposes a cocktail of measures to revive the economy, including borrrowing money from Brazil, Russia, India, China and South Africa, a group of large emerging market nations collectively known as BRICS, and setting up a sovereign wealth fund, has so far failed to attract any funding amid reports it needs $27 billion.
ZimAsset also proposed the sale of bonds, securitisation of remittances, re-engagement with international finance institutions and the creation of special economic zones, but without funding, all this remained pie in the sky, analysts warn.
Government has had to confront the reality that it might have to revise its ambitious 6,1 percent growth projections for this year.
Social service provision on the one hand is also collapsing as more and more people fail to access basic economic rights enshrined in the new Constitution such as water, health and education.
The economy, which has been stagnating, has taken a turn for the worse after the July 31 election which saw Zanu PF claim a landslide victory.
At yesterday’s meeting of the ruling party’s supreme governing body, the politburo, business ideas on how to save the economy were high on the agenda.
Analysts said reality was beginning to sink in that a new paradigm was needed to save the economy.
University of Zimbabwe political science lecturer Eldred Masunungure said the 51-year-old liberation movement was beginning to realise that there was need for urgent interventions to prevent total collapse of the economy, hence the extraordinary meeting.
“It’s recognition that things are going haywire, things are falling apart,” Masunungure told the Daily News.
“They are trying to find ways of averting an inevitable collapse of the economy.”
The political scientist said the ruling party would also seek to enforce a shift in economic policy which will boost investor confidence which had been eroded by multiple messaging from government.
“They are biting the bullet and we are going to see the shifting of economic policies,” he said.
“There have been conflicting signals sent to investors and this meeting might have been convened so that they come up with a unified position on the economy because investors have been confused by the multiple positions coming from the Zanu PF government.
“They have been singing from multiple hymn books. And this meeting will probably see policy cohesion.”.
Political analyst Maxwell Saungweme said it was natural for Zanu PF to convene a meeting on the economy because of the dire current state of affairs. He described the current situation as an “economic emergency.”
MDC leader Morgan Tsvangirai on Sunday told party supporters during a rally in Norton the economic problems bedeviling Zimbabwe could culminate in an uprising, warning that many have been pushed to the brink by the collapsing economy.
Tsvangirai warned that people might be forced to take to the streets demanding food if the economic situation was not addressed speedily.
But Masunungure ruled out mass action, saying Zimbabweans have gone beyond the search for a collective approach and that the suffering people would deal with their problems at an individual level.
“Gone are the days when the ZCTU led by Tsvangirai would organise food riots and massive stay aways,” Masunungure told the Daily News. “Tsvangirai is living in the past for suggesting that. “
For 34 years the same bunch of geriatrics has been having these polit whatever meetings and nothing ever came out of it. The moment they leave that meeting they are already plotting the next looting expedition.
They are just pretending to be doing something to calm down the populace. For how long ?
Do the idiots that voted for Zanu PF realise they and their future generations are liable for this debt? Do they realise the 27 billion must one day be repaid? All these jokers seem to think borrowing means free money as it appears no one in Zimbabwe (apart from a handful of serious businessmen) has any thought of paying up.
Tossing in an odd Latin phrase does not cover up the fact that these guy do not have a clue.
Chinamasa a Keynesian! Does he or the attributor even vaguely understand the meaning of this?
We can thank our lucky stars that the reserve bank lacks most of the tools to intervene since al previous interventions have been to worse for the population at large.
I can help Mr Chinamasa by clarifying for him that the economic problems are at root political. Corrupt, malignant criminals including himself have hijacked the state.
The chickens have come home to roost. What took a century to build has been destroyed in about a decade. The huge amounts of money these robbers helped themselves to was assumed to be endless and thought to come from a magic fountain. Zimbabwe is bankrupt, they have killed the economy. There is nothing left to loot and the momentum has died. No more freebies! They are begging for outside help because it certainly cannot come from within. No one is going to help these liars. They will steal 90% of any money coming in. If FDI does miraculously result in a successful enterprise it will be grabbed by a Minister or Zanu cadre. Vermin the lot of them!
Let them rot in Chikirubi while the stolen loot is recovered, then drop them off in rural Matabeleland.
not too long now.
Chinamasa, the answer is economic collapse due to 34 years of evil, stupid, useless, self enriching ZPF driven political policies – clown.
yes well they are reaping what they have sown. It is called God’s judgment. God will NOT allow sin to flourish for ever. They need to be afraid.
How can anyone in their right believe a word these looters have to say. 34 years of destruction….what a cv.
Correction…anyone in their right minds
I wonder why Chinamasa is surprised. He allocated $ 280 million to the office of the President yet he only gave $8 million to the Industry ministry and a paltry $55 million to energy. He should expect the President’s office to produce more than these 2 ministries combined. Agriculture was also allocated less than the President’s office, therefore that investment in the Prez office should produce revenue. Basic finance and economics education missed. Finance your sources of income (cashcows) more and they will give you more in return.
He must just take a good look at the Ziscoosteel debacle for answers. Zisco is the epitome of all problems in Zimbabwe. Zisco has the potential to inject $ 1 billion a year into the economy whether its wholly foreign owned or not. We have been playing jokes with this crucial company for more than 20 years therefore loosing $ 20 billion in the process. However presently the Steel markets are depressed we shall see if it will be viable to start it up in this environment. We have enough coal and if we had done the Sasol way we could be getting $ 5 billion or more from coal gasification. Zim alloys, Merlin, Cone Textiles, Kadoma textiles, Zim cast, Sable, Zimphos, Bata, Dunlop, Wattle company, Zesa, the list is endless, that is where we lost all the liquidity.
I agree. Chinamasa should not be surprised, after zanupf was able to find 10 million dollars to pay the Israeli firm, NIKUV to steal the election for them. maybe they can give NIKUV another 10 million dollars to steal the economy for them. Ooops they did pay 10 million dollars for the mess they find themselves in. The only people that zanupf fooled with their so called winning of the election was themselves. The rest of us will sit on the fence and watvh them continue to struggle wih the economy. None of us, who are outdie of Zimbabwe, and who have money will invest in Zimbabwe. i am taking my dollars to invest in South Africa.
Zanu PF – these were the fellows that believed that pure diesel could come out of a hole in a rock…
Probably the key component of the new economic strategy will be US$ gushing out of a hole in a rock…
So the fool does not even understand what is causing the economic problem? Its Zanu misrule and election rigging you idiot. Tongai Tione. Landslide? Now the land is sliding under your feet.