Opinion

Mnangagwa post-Covid-19 headache

President Emmerson Mnangagwa will this week announce whether or not
his administration will extend a national lockdown which seeks to slow down the spread of the coronavirus which has claimed nearly 300,000 lives across the globe.


Already several people have been arrested for violating restrictions.
Zimbabwe’s highly informalised economy has been bruised. Livelihoods
disrupted. Zimbabwe’s safety nets have been stretched and the government
which currently has few friends on the global arena has limited options.
Finance minister Mthuli Ncube’s claim in February that Zimbabwe had a
ZW$3.1bn surplus proved to be a fallacy a month after coronavirus hit the
economy.


Striking a balancing act thus becomes Mnangagwa’s headache ahead of his
announcement.


Last week, Zimbabwe appeared to have flattened the curve when confirmed cases of the respiratory ailment flatlined at 34 for close to a week. With most formal businesses now operating, albeit at a limited scale Zimbabwe now faces a bumpy road ahead to stimulate growth.


The ZW$18bn stimulus package which seeks to stimulate economic
growth and shield vulnerable groups from Covid-19 aftershocks will be
inflationary. In March, Zimbabwe’s annual inflation stood at 676% and will
continue to trend upwards. The Reserve Bank Zimbabwe has been making
frantic efforts to defend the value of the local currency which includes
freezing individual and corporate accounts suspected of engaging in illegal
foreign currency dealings.


Should Mnangagwa lift the restrictions, demand for foreign currency will
increase and the domestic currency will continue to lose ground. So what’s
next? On an economic front Zimbabwe should deliberately pursue a policy
that supports import substitution in the letter and spirit. In the past, noble
causes which were premised on reducing the country’s import bill turned out to be controversial due to their opaqueness.

Going forward, the Parliament which should be more visible in guiding the executive arm of government should rise above party politics and guide the policy framework.


While most corporate leaders are busy projecting post-Covid-19 scenarios,
Mnangagwa should also aggressively pursue public sector reforms. For
instance, the size of the Office of the President which has dozens of officers
enjoying perks similar to those of permanent secretaries of ministries should be trimmed. The size of cabinet which Mnangagwa trimmed after taking over from long-time leader Robert Mugabe should also be further reduced.


The country’s tax agency has already warned that revenues will plunge after
the pandemic. Put differently as it stands there are too many people around
a small cake. This fiscal pressure may force the government to introduce new taxes to fund its expenditure yet what Zimbabwe needs now is to stimulate domestic consumption and grow the economy. Milking a frail cow will not take us anywhere.


Measures introduced in the tourism sector which promote domestic
tourism are but some of the steps government should take in stimulating
growth. After all is said and done, Zimbabwe’s reengagement with creditors
remains critical.


We cannot go it alone.

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