The rate at which the economy is imploding is a source of concern



It is almost six months since President Emmerson Mnangagwa swept to power in the general election amid hopes that he would be remembered in the history of Zimbabwe like Deng Xiaoping of China, whose rule ensured that the Asian country’s GDP rose tenfold.

After Chairman Mao Zedong’s death in 1976, Deng led China through farreaching market reforms, having inherited a country beset with social conflict, disenchantment, and institutional disorder resulting from the chaotic policies of the Mao era.

China’s economic growth under Deng was rapid, surpassing the East Asian countries who had dominated the arena. Economists estimate China’s GDP growth from 1978 to 2013 at between 9.5% and 11.5% a year.

President Mnangagwa rose to power amid the same euphoria and his mantra has been “Zimbabwe is Open for Business”, while at the same time making sure that the centre of his policies is hinged on reformist economic policies.

This was necessitated largely by the policies of his predecessor Robert Mugabe who was more political than economical. Since his ascendancy, Mnangagwa has wooed the business community (both domestic and international) and commissioned projects that will have a long term benefit for the country, particularly in the mining and agricultural sectors.

His appointment of Finance and Development Minister Mthuli Ncube was welcomed by the business community because Ncube has impeccable economic history. President Mnangagwa’s cabinet is also composed of few other technocrats such as Minister of Youth, Sport, Arts and Recreation Kirsty Coventry and Transport and Infrastructural Development Minister Joel Biggie Matiza.

All this brought hope to Zimbabweans when the cabinet was announced last September.

But the rate at which the country’s economy is imploding is a source of concern. We believe it is time Zimbabweans become level headed to solve the matrix and avoid a repeat of 2008. We believe that a stitch in time saves nine. President Mnangagwa needs to steer the ship off the stormy waters as soon as possible for him to be remembered as the Deng Xiaoping of Zimbabwe.

The country has started the New Year on a wrong footing as fuel queues have bounced back, this time it appears with a bang as people are having to sleep at service stations to secure the “golden” liquid. Yes, the productive age group is resorting to spending long hours in fuel queues while the economy is bleeding. The country is losing millions of dollars in revenue as the working class and other notable economic players spend their time idling.

The prices of basic commodities continue to skyrocket, while the transport situation is dire particularly in the urban areas because of fuel shortages. Commuters in urban centres have been hit hard in their pockets in the form of transport as public transporters have quadrupled their charges. The rural folk have not been spared either in this regard.

Our view is that the authorities must take these unfolding events seriously and ignore the notion that it’s business as usual, because the reality on the ground is akin to a time bomb.

Coupled with sporadic strikes in the health sector by junior doctors, the situation is a real crisis and the government has to find solutions for its citizens. Zimbabwe’s sovereign debt was expected to grow by 8.69% to a record high of $20 billion by the end of 2018, according to local fact-checking firm ZIMFACT. This situation has been stoked by continuous borrowings to finance budget deficits through Treasury Bills and central bank overdrafts.

It is against this development that Ncube introduced the 2% tax on electronic transactions, but the move seems to have served to reduce business confidence, driving commerce underground, and prompting companies to increase the prices of goods and services to cover the costs of the additional tax. The irony is that while manufacturers and retailers continue to profiteer, workers’ wages have been stagnant and have been eroded by the three-tier pricing system.

Experts are divided on opinions about the current administration, as some think the worst conditions are already here, and others believe they are temporary before things change for the good.

The present state of affairs has resulted in a steep loss of confidence in business and we believe President Mnangagwa needs to beat his lieutenants into line for him to earn the Deng Xiaoping tag. In the meantime, he needs to address bread and butter issues as soon as possible to avert a looming disaster.