'Zimbabwe's economic crisis might last 10 years,' says Biti

Zimbabwe's economic recession might last at least 10 years if no urgent action is taken to reverse it, says the MDC Renewal Team secretary, Tendai Biti.

The country is going through an economic crisis that took a turn for the worse after last year's general elections which President Robert Mugabe and Zanu-PF won with a landslide but against allegations of electoral fraud.

Treasury is struggling against severely poor revenue inflows, government is failing to fund critical public service programmes and unemployment is rising as companies closures increase and investors keep away.

"It is clear that, a year after the elections, the Zimbabwe economy has entered into the realm of a ‘U' shaped recession that is likely to last for at least 10 years, unless there is courage to act differently to usher in a new discourse on the same," said Biti, who was Finance Minister during the 2009-13 Government of National Unity (GNU), in a statement on Thursday.

The GNU had managed to arrest the economic meltdown that became pronounced in 2000 when Mugabe's government embarked on a contested land redistribution programme, leading to international isolation that was also sparked by human rights abuses, electoral thefts and bad governance.

After winning the 2013 elections, the Zanu-PF government adopted a new economic blueprint, the Zimbabwe Agenda for Sustainable Social and Economic Transformation (Zim Asset), that it hopes will reverse the current crisis.

However, Biti described the policy as "an embarrassing failure", despite Mugabe's recent statement that Zim Asset was turning the economy around.

While Zim Asset had promised to generate 2,256,000 million jobs, 250,000 low income houses, a growth rate of 9 percent, 310 new public schools and 300 more clinics up to 2018, Biti said, the blueprint was in lagging behind.

The economic policy, he said, entailed that Zimbabwe would create 451,200 jobs, 50, 000 houses, 60 new schools and 50 clinics every year but, "quite clearly, a year later, Zim Asset is in massive deficit".

"The economy is in comatose, arrested by stagnation and deflation. There is continuing and deepening poverty characterised by suffering and deprivation.

"It is clear that Zimbabwe's growth rate in 2014 will be less than 2 percent, signifying a status quo of economic malaise characteristic of the depression years (1997-2008), a period where the economy lost 60 percent of its value…A further 40 percent of the economy is likely to be lost," added Biti.

Biti expressed concern at the poorly performing budget, with the Zimbabwe Revenue Authority (Zimra) indicating in a July 22 report that there was a one percent shortfall in revenue collection.

For the half-year period up to June, Zimra had collected $1.72 billion instead of the targeted $1.74 billion, while domestic arrears ran close to $800 million.

The Finance ministry recently revealed that Zimbabwe was saddled with a total debt of $9.9 billion.

"That the government is experiencing serious budget shortfalls is reflected by its failure to pay workers on time. The underperformance of the budget has resulted in serious and unprecedented revenue collection methods by Zimra…(which) are exacerbating an already depressed situation," said Biti.

He called for a rethink on revenue collection and suggested softening up by the raging Zimra to avoid further company closures, and urged a "new discourse that is anchored on the reality that we cannot expect solutions form the same people who have created the problems", apparently referring to Zanu-PF.

Biti proffered a 16-point plan to revive the economy which would include convening an all stakeholders dialogue on the economy, leveraging of minerals, immediate solution to Zimbabwe's debt, a $15 billion construction fund to deal with the infrastructure deficit, as well as recapitalisation and addressing rural poverty.

In addition, Biti suggested the unconditional re-engagement with the international community and immediate dialogue with regional and continental banks such as AfDB, the African Import Export Bank, PTA Bank and the Development Bank of Southern Africa.

The former finance minister called for the removal of the Indigenisation law that has been seen to scare away investors, the "execution of an aggressive strategy to attract external capital flows" and "stopping the tide of de-industrialisation" while abandoning the US dollar as the main currency in favour of the South African Rand.

There is need to put a stop to renewed land invasions and restoration of a land market in Zimbabwe, he added.