Ray of hope for Zimbabwe’s economy
What you need to know:
Emmerson Mnangagwa was sworn in as Zimbabwe’s president yesterday, marking the final chapter of a political drama that toppled his predecessor Robert Mugabe
Harare. For most Zimbabweans, incoming president Emmerson Mnangagwa has only one priority: rebuilding an economy shattered by policies that threw out investors and destroyed the key agricultural sector.
The country’s economy has halved since 2000 when many white-owned farms were seized.
Since then, the economy has survived on scarce US dollar notes -- often used until they fall apart -- and for the past year a parallel “bond note” currency that is pegged to the US dollar but widely distrusted.
The World Bank estimates that 2.8 million people, or 17.5 per cent of the population, are short of food, and says paying public wages sucks up a staggering 87 per cent of government revenue.
Mnangagwa addressed the unemployment crisis in his first speech as the president-in-waiting on Wednesday, saying: “We want to grow our country. We want jobs, jobs, jobs!”
Anger at bond notes was a driving force behind protests last year, while rocketing prices have returned in recent months -- adding to the pressure that finally forced the military to take over.
The country does have economic strengths, especially in tobacco, cotton and mining, and Mugabe’s fall could offer the chance to open the taps for funding from overseas donors like the International Monetary Fund (IMF).
Opening up?
Mnangagwa -- a veteran Mugabe loyalist -- appears open to limited economic reform, including of the “indigenisation” laws that force foreign-owned companies to sell majority stakes to locals.
The IHS Markit analysis consultancy also predicted the reinstatement of former finance minister Patrick Chinamasa, saying the move “would indicate a more pro-business shift (and) re-engagement with the international community”.
But local economists like Tony Hawkins, a professor at the University of Zimbabwe, warned that the country’s problems run deep and international donors may not be encouraged by the new ZANU-PF regime.
“Lenders like the IMF want reforms. They will say trim the civil services, cut the wage bill. None of these can be achieved overnight,” he said.
“If Mnangagwa cuts civil servants salaries, he is going to lose his support. (AFP)
