Mnangagwa must do a surgical operation on the economy

EDITORIAL COMMENT

The election of President Emmerson Mnangagwa has brought with it a surge in optimism in Zimbabwe over the economy.

With his victory upheld by the Constitutional Court two weeks ago, Mnangagwa, has taken his place among the World’s emerging class of rulers.

But, in light of growing economic gloom after years of dismal economic performance, blamed on the misrule of his predecessor Robert Mugabe, Mnangagwa’s administration needs to address Zimbabwe’s numerous challenges. Herein lies a crisis of expectations in the southern African nation whose economy contracted by nearly 50 percent between 2000 and 2008.

President Mnangagwa faces numerous problems and the most pressing ones are that the economy is still languishing in near recession with rising inflation, foreign debt levels, paltry levels of foreign investment and price increases of basic commodities remain a potential point of contention.

He also comes across a currency crisis which has ravaged the economy and corruption is also hurting the economy.

Only this week, there has been a wave of price increases as well as growing shortages of basic commodities and Zimbabweans cannot sustain the situation any longer.

The country is also battling a deepening foreign currency crisis which has made it difficult for companies to import critical raw materials.

The foreign currency shortage, especially the United States dollar, has negatively impacted on companies, which are now procuring the foreign currency from the black market at higher premiums in order to settle on time their external payments for critical raw materials and other products pushing their costs.

Mnangagwa, who will soon appoint a new Cabinet following the swearing-in of lawmakers yesterday, also needs to cut public spending. Zimbabwe government borrowed heavily in recent years from the central bank, crowding out productive sectors. In our previous edition of the Business Times, we reported that treasury had recorded a budget overrun of $1,4 billion during the first six months of the year. This is unsustainable especially at a time when the country’s current account is also deteriorating.

The second executive president of the republic has to stop the further deterioration of the economy and he has to change the course of events and lift the economy. Now that Mnangagwa has all these problems on his lap, there is no doubt that he needs to perform the necessary surgical operation on the economy and introduce the needed austerity measures. Structural issues negating economic growth have to be addressed urgently.

For Zimbabwe to move into a more positive era, all he needs to do is deliver as his recent election sets the stage for speeding up economic reforms.

Failure to do so may lead to Mnangagwa contending with an array of economic troubles like his predecessor and an increasingly disgruntled populace.

He should also continue to vigorously push an agenda to open the country for business, a situation which is likely to lead to more investment into the country.

The world has opened its arms to Zimbabwe after the holding of a credible election on July 30. It is an opportunity President Mnangagwa has to grab without fail.

The first to step in showing signs of fiscal discipline is the appointment of a lean and efficient Cabinet; one that inspires confidence and has the capacity to drive the agenda. Without that, history will judge President Mnangagwa harshly as a leader who promises so much but fails to deliver where it matters most.

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