069_Global12_InFocus_Zimbabwe

Global 13

In FocusZimbabwe nomic and social descent – only a full-scale the driving engine for growth, were lower of foreign capital if its mining, manufac- civil war could have been worse. That ca- than anticipated. The sector registered a turing and agricultural sectors are to re- tastrophe seemed imminent as violence be- growth of 25 percent instead of the 33 per- gain anything of their former vigour. But tween the ruling ZANU PF party and the op- cent projected earlier. the schizophrenic nature of the economic position Movement for Democratic Change Agriculture, manufacture and services, par- management has become even more pro- (MDC) led by Morgan Tsvangirai intensified ticularly in the IT sector, all registered posi- nounced with the different components of in the run-up to the 2008 national and presi- tive growth, although Zimbabwe still has to the inclusive government pulling in differ- dential elections. Eventually, wiser counsel import food; its current trade balance is in ent directions. prevailed and an inclusive government, with deficit, with imports constituting 9 percent of While the finance minister is looking for Tsvangirai as prime minister and Mugabe GDP, and the import/export ratio is pegged at least $6 billion to reinvigorate the min- as president was formed in 2009. The rela- at 3:1. The domestic account balance is in ing sector, President Mugabe seems deter- tive political calm allowed the opening of a deficit at 29 percent of GDP. “We depend on a mined to scare away all new investors with small window to begin the daunting proc- false accumulation model where we think we the empowerment policy requiring foreign ess of a return to economic normality. can create wealth by extracting and import- companies to indigenise 51 percent of their The first pragmatic move by the new ing,” Biti said. “The loot committee mentality shares. Two of the largest platinum mining government was to dump the worthless is still with us in this present day.” firms have already done so but many oth- Zimbabwe dollar and adopt a basket of cur- The biggest hurdle for sustained and ers have shied away. The stricture does not rencies, including the Botswana pula, the rapid growth, according to Biti, is the debt seem to apply to Chinese mining compa- South African rand and the US dollar. The overhang. “Zimbabwe remains in debt dis- nies who have been forming an increasing effect was immediate. The downward slide tress,” he said, with total external debt es- number of joint ventures. Foreign direct in- was arrested as prices stabilised. With the timated at $10.7 billion (113.5 percent of vestment (FDI) inflows have been a paltry MDC’s Tendai Biti appointed as finance GDP) at the end of 2011. $125 million. minister, a measure of fiscal discipline was The World Bank and the IMF have re- Zimbabwe has embarked on the long trek introduced. Inflation fell to -7.7 percent in sumed relations with Zimbabwe, but new back to health, but the economy remains December 2009 before moving upwards money from these institutions and other weak and fragile. It will take careful nurs- again the following two years to around 5 international donors will only be forthcom- ing and help and support from outside if it percent. Biti expects it will remain within ing when the outstanding debts have been is to make the transition. The fundamentals that margin in 2013. settled or an agreement on the process are good but unless the leadership can rec- Starting from a very low level (-14 per- reached. The governor of the central bank, oncile its Jekyll and Hyde personalities, the cent in 2008), the economy grew 6 percent Gideon Gono, has proposed the Zimbabwe biggest harm can come from inside.● in 2009, 8 percent in 2010 and around 7 Accelerated Arrears Clearance, Debt and percent in 2011. Biti had projected a growth Development Strategy (ZAADDS), based of around 10 percent for 2012 but revised on negotiations with donors and other cred- Anver Versi is Editor of London-basedAfrican the figure to a more realistic 5 percent when itors, as the way forward. Business andAfrican Banker magazines the revenues from mining, expected to be Zimbabwe urgently needs large lashings globalfirst quarter 2013 www.global-briefing.org l69


Global 13
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