IMF’s nice words mask economic disaster

I laughed the other day when I read the recent report on Zimbabwe by the IMF. What nice, sophisticated diplomatic language can be used to describe what can only be called an unfolding economic disaster.

It is rather shocking that the international community continues to use such language, as it does not help the situation. Zimbabwe will only start to recover economically when Robert Mugabe goes.

Part of the IMF report read: “The macroeconomic environment is expected to remain challenging in 2014, and the outlook is for continued moderate growth. Achieving Zimbabwe’s fuller growth potential over the medium term depends on pursuing strong macroeconomic policies, including by building up fiscal and external buffers and increasing budgetary resources going to non-personnel related spending, and implementing structural reforms to foster investment, improve the business climate, and strengthen governance and institutions, including by increasing the transparency of the minerals regime. It will also be necessary to engage with the country’s creditors to work towards a solution to the long-standing debt arrears problem.”

In straight talk: the economy is not likely to get better at all, in fact things will get much worse until the government finds more money. Too much money is being spent on civil servant salaries with little being invested in the economy. The economy will hardly grow in 2014.

Facing collapse

Government must restructure and come up with a political solution to improve the business investment climate in the country otherwise expect no foreign direct investments until this is resolved. Corruption in all sectors especially mining is rampant and will not attract new investors into the country at all. As long as this situation remains, the economy is facing collapse.

There is hardly anything new in this observation, we knew this as soon as Zanu (PF) rigged the elections last year.

As long as things do not change, we face collapse. My readers will know that any economy in which people have no disposable income chokes to death. That is exactly the situation we are in now, where slowly but surely Zanu (PF)’s lack of a credible plan to attract investors and create more jobs has the economy shrinking.

Indigenisation and institutional failure because of Zanu (PF) patronage and poor policies continue to limit recovery prospects. I don’t know how many times we must say this.

Slow poison

Clearly what was claimed to be classic genius by Zanu (PF) in introducing the US Dollar will turn out to be our slow poison. Zimbabwe is now a haven for easy access and external remittance of the US Dollar for the region. As a result, any money that comes into the country quickly finds itself elsewhere leaving our economy dry. In addition those in the region are coming in and walking out with huge amounts of US Dollars. This country is nothing but a conduit for currency for many. We should rather have opted for the South African Rand – but we all know the nefarious cry for sovereignty against good economic sense invariably wins the day.

Zimasset will not work because it is based on the very same premise that worries the IMF in that unless we see government revenue increasing and more capital expenditure, nothing much will change.

Corruption will continue to increase as there is no real appetite to deal with it once and for all. Our institutions have all become highly inefficient and corrupt. Doing business here has become a political process and this will continue to discourage any significant investment.

The brain drain has resulted in mediocre management competence both in the public and private sectors. A clear example of this is in our sports bodies that are rife with corruption and non-delivery. Yet just a few weeks ago the same individuals were put back at the helm of ZIFA.

Same old individuals

This is the case with most public institutions, where new leadership talent is scarce and the same old individuals are recycled. Nothing much is going to change until we see a new, younger and more accountable leadership emerging.

Mugabe’s legacy does not set a good picture at all; our education dividend from investment in education in the first 10 years of independence is lost; the agricultural sector is devastated and now dominated by non-productive peasants who prefer to grow tobacco; our infrastructure is dilapidated and needs serious investment; social services are inconsistent and inefficient; unemployment is at its peak and we have a huge survivalist informal sector; corruption is now the norm; the value systems of our society are something to be ashamed of; our financial services sector is struggling with most indigenous banks at the brink of closure. Industry is on its knees due to lack of funds and high competition from cheap imports. This is what the IMF cannot print. – Vince Musewe is an economist and author based in Harare. You can contact him at [email protected]

Post published in: Opinions & Analysis

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