Solutions Still A Pipedream In Tackling Zim’s Ailing Economy, Rising Unemployment
By Itai Muzondo
It may sound like mocking the man of the lapel, but it is true, they do pray for the nose-diving economy.
Vice President Phekezela Mphoko openly acknowledged that the Zimbabwean economy had become dilapidated and was troubled to answer a question from a university student towards a way forward to arresting the effects of the economic decline at a public lecture held at Great Zimbabwe University on May 14, 2015.
“The economy is really bad; there is nothing worth celebrating though we must just keep our nation as peaceful as possible. About future prospects, I urge you to wait until your time comes like I did for the past 35 years until I was appointed VP,” answered Mphoko to a booing crowd of students in need of answers about striking the economic hardships they face as students especially to the point that there is no national policy which looks at their economic welfare and ultimately making them vulnerable to prostitution.
“Zvakapresser” (Things are tight) has become a mechanical talk mainly due to the ever failing economy.
Most activists are of the belief that in 2007 Indigenisation Policy successfully drove investors away as it directed that foreign owned companies should be forced to cede 51% of their shares to local people and the Zim Asset blueprint which mass-paraded economic revival has achieved nothing as of now.
On human interest basis, indicators reveal that soon after the announcement of 2013 election results, Zimbabwe Stock Exchange fell from grace to grass by an alarming 11% which was recorded one of the biggest one day decline as foreign investors pulled out.
Statistics have revealed that the national Gross Domestic Product (GDP) has drastically fallen whereas government spending is 97.8% of GDP.
State enterprises are strongly subsidized, taxes and tariffs are high. State regulation is costly to companies, starting or closing a business is slow and costly. Labour market is highly regulated, hiring a worker is cumbersome and firing a worker was difficult until the Supreme Court case to the rescue recently..
Poverty and unemployment are both endemic in Zimbabwe, driven by the shrinking economy and hyper-inflation. Poverty rates run near 80%, while the unemployed is ranked as the world’s largest, at 95% and public debt amounts to 55% of domestic output.
Ironically, Zimbabwe’s economic freedom score is 37.6%, making its economy the freest in Sub – Sahara Africa Index 2015. Its score has increased by 2.1% from last year, driven by a particularly large gain in the control of government spending and improvements in six other economic freedoms including trade freedom and fiscal freedom. Nonetheless, Zimbabwe is ranked last out of 46 countries in Sub-Saharan Africa, and its overall score remains far below the world and regional averages.
In an exclusive interview with Radio VOP, Masvingo based economist, Christopher Ruwuyu had this to say about the country’s sickly economy:
“Zimbabwe’s economy has reached alarming rates which can however be amended if rightful channels are put to action. Currently, the economy is moribund, its politics zero-sum and its institutions hollowing out, making it an insolvent and failing state.
“The regulatory framework remains costly and time-consuming. Incorporating a business costs more than the level of average annual income, and completing licensing requirements takes over 400 days. Corruption remains endemic,” said Ruwuyu.
“Zimbabwe’s average tariff rate is 13.3 per cent. Imports may face significant delays. Foreign ownership levels are capped by the government, and numerous state-owned enterprises distort the economy.
“The small, bank-dominated financial system is vulnerable to state interference. Non – performing loans have risen to over 15 per cent of total loans. Much of the population remains outside of the formal banking sector,” Ruwuyu added.
Fearless economic commentator, Vince Musewe urged government to re – engage the West as he directly noted that China has done us more harm than good as a strategic economic partner to Zimbabwe before he rubbished Zim – Asset as a mare pipedream that can be never achieved.
“We need a radical change in our economic policy if we are to get out of this Zanu (PF) manufactured rot.
“The Zim Asset is a pipedream, a delusion manufactured through a cut and paste exercise. It is like the devil promising you eternal life in heaven – it is not going to happen.
“Western countries have simple interests, that of investment and benefit the locals, unlike the Chinese who look into dominating the world through commerce and create jobs for 70% of its population that lives in extreme poverty for which in return Zimbabwe is getting sovereignty and widespread poverty,” said Musewe.
Social commentator, Davison Mugodzwa said the solution lies in expected political reforms besides requiring recovery constructive engagement on all fronts.
“Zimbabwe still has the capacity to reform and prevent further deterioration, but has failed to demonstrate the political will to do so. It will continue struggling without actively building confidence on a range of fronts, including tangible commitments to greater policy coherence, improved governance, adherence to the rule of law, accountability and clarity on the leadership succession in Zanu (PF).
“Zanu (PF) holds primary responsibility for investing in efforts to rebuild trust and collaboration with domestic and international constituencies. The challenge needs a collective effort underpinned by an inclusive national dialogue with the opposition and civil society on political, social and economic reform priorities; and clarifying and acting on key policy areas, including indigenisation, land reform, rule of law and fighting corruption,” said Mugodzwa.
Meanwhile, Zaka hookers have reportedly been demonstrating for porridge given to pregnant women and children under the age of five by Care International under the Enhancing Nutrition, Stepping Up Resilience and Enterprise (ENSURE) project as the economy has failed to give them food in the drought stricken Zimbabwe this year.