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Zim 2018 polls: Economy must win big!

27 Jul, 2018 - 00:07 0 Views
Zim 2018 polls: Economy must win big!

eBusiness Weekly

Main candidates pledge reforms
First litmus test for ED, Chamisa

Golden Sibanda and Martin Kadzere
when Zimbabweans cast their ballot in an historic harmonised election on Monday, the first without long-time ex-leader Robert Mugabe who reigned for 37 years, the long disillusioned majority are hoping that the plebiscite will this time deliver the wobbling economy into “safe hands” for sustainable, robust and transformative growth.Though 22 candidates are eying presidency, the main contenders in the race are President Mnangagwa of Zanu- PF, who took power in November last year following military intervention, which resulted in Mugabe resigning, and Nelson Chamisa, the candidate of the MDC Alliance, a formation of seven largely small political parties.

The election is an historic one in that it will be the first without Mugabe and the late Morgan Tsvangirai, the opposition leader to emerge as the main challenger of the ruling party since 2000.

Many people are certainly not lost to the myriad of challenges besetting the southern African economy, which lost half its gross domestic product (GDP) in the decade to 2008, and pin their hopes on the winner of Monday’s poll to end the years of misery.

The decade to 2008 was characterised by hyperinflation, which peaked at 231 million by July 2008, and widespread collapse of companies, industrial and agricultural production before a shaky Government of compromise brought brief respite in 2009.

But the deep seated problems afflicting the economy, which have simmered over the years, did not disappear after dollarization in 2009 despite the modicum of growth since then up until about 2011 when, again, economic growth started to taper off until this year.

Zimbabwe currently faces major economic challenges of a policy and structural in nature. It also faces ‘soft’ challenges that include the impact of sanctions imposed by western countries over Zimbabwe’s land reform and negative external perceptions.

While a lot will need to be done post the national election, on his part the incumbent President Mnangagwa had already started on a path of reforms of policy and programmes to reorient the economy and place it on a sustainable growth trajectory.

Undoubtedly, Zimbabwe’s biggest challenge, which the winner of this harmonised election must countenance, is the issue of slow economic growth, which had however, started to show signs of potential growth since President Mnangagwa took over.

Faster economic and investment growth will certainly impact positively on a number of aspects of this economy that include high levels of unemployment, low tax inflows, widening budget deficit and unsustainable, but inevitable government expenditures.

Limited financial resources in Treasury have also resulted in little savings for investment in capital formation, which has seen the quality of infrastructure deteriorate over years. The African Development Bank estimates that the resultant infrastructure gap in the country now requires at least $17 billion to close it.

This entails fixing the poor state of roads, rail and air infrastructure to fully functional and modern state. The administration of President Mnangagwa, though, has already started working on a number of deficiencies in these aspects of infrastructure.

The resource deficiencies also resulted in the country failing to invest in maintenance of key infrastructure such as for electricity generation nor investment in expanding existing capacity, resulting in inadequate internal capacity to supply required power.

This situation, lack of efficient, functional and modern enablers seriously affected the country’s competitiveness and the economy set further into the economic quagmire.

Zimbabwe, the only African country which uses predominantly the US dollar as its transaction currency, faces an acute shortage of hard currency due to limited export capacity, low foreign direct investment and virtually no access to foreign credit.

Lack of access to external credit, for a country with a high and unsustainable import bill, (given serious challenges with industrial, agricultural and mining productivity), saw arrears on firms’ external accounts ballooning to levels never seen before.

Other challenges the candidate that will win Monday’s election will need to confront include high incidence of corruption by public officials, poor performance and perennial loss making by a majority of State entities, lack of competitiveness of local firms, poor health delivery system and limited access, high cost of education and challenges of access to clean and portable water among others.

Further, the majority of the populace are struggling with high cost of living and shortage of decent housing or accommodation amid limited disposable incomes.

The MDC Alliance has promised to grow the economy to $100 billion by 2029, while the ruling Zanu PF is targeting a middle income country status by 2030.

“In my view, the manifestos for Zanu and Alliance are generally comprehensive and to achieve is the main issue,” Dr Gift Mugano, an economist with Zimbabwe Ezekiel Guti University said.

“For the Alliance, it is about strategies they are going to deploy to achieve the $100 billion economy while for Zanu PF, a middle income nation can be achieved through job creation.”

The incumbent, President Mnangagwa, is banking on victory to provide the much-needed endorsement of his Presidency, consolidate momentum he has already built, and lure foreign investors into the economy to “create a new Zimbabwe we all want”.

Patrick Chinamasa, Zimbabwe’s Finance and Economic Planning Minister, recently told AFP the historic elections will bolster efforts to revive an economy that he admits “collapsed” due to the land reform process.

He predicted the ruling Zanu-PF party would “resoundingly” win the July 30 vote. “I’m very confident that our president, President Mnangagwa, is going to win resoundingly. Zanu-PF also is going to win resoundingly,” Chinamasa told AFP.

“…the task before President Mnangagwa is to recover the economy and that is what he is doing now by re-engaging not just economically, but also politically, so that we normalise political relations.”

President Mnangagwa said this week that the previous administration “had no vision” and the wave of ground-breaking of national economic projects was testimony of the Government’s determination to implement programmes to create jobs, facilitate economic growth and enhance living standards. This follows the launch of multibillion dollar investment deals in the past week—some which were on the table several years back, but could not take off as a result of ‘tortuous bureaucracy’.

President Mnangagwa said there was a “new sense of urgency” in prioritising investments.

“I think ED has delivered during a few months he had been in charge,” Sylvester Magu, a bar attendant in central Harare said. “The roads are being rehabilitated, investment commitments are flooding and generally, there is growing confidence in the economy.”

Chamisa, on the other hand said he would seek debt forgiveness to attract new funding.

The Alliance leader said his government would abandon the bond notes and join the Common Monetary Area led by South Africa to address cash shortages, reduce the budget deficit as well as investing more into infrastructure development.

“That can only be done by the new and not the old that is masquerading as the new,” Chamisa said, referring to Mnangagwa, at the launch of the MDC Alliance manifesto in June.

“The epicentre of the crisis that our country is facing is economic mismanagement.

“The Zanu PF government has put our country in a position of massive disequilibrium underlined by poverty and underdevelopment. “Ninety five percent of our people are unemployed, 79 percent of our people are living in extreme poverty.”

 

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