Biti criticizes Zimbabwe's economic policies

Former finance minister Tendai Biti has strongly criticized the economic policies under the current administration, describing them as "fictitious" and blaming them for Zimbabwe's ongoing de-industrialisation, capital flight, and economic regression. Biti, who served as Treasury chief during the Government of National Unity from 2009 to 2013, cautioned that Zimbabwe is perilously close to a repeat of the hyperinflationary chaos of 2008, which led to the abandonment of the Zimbabwean dollar.

"We are in a recession. We are in a depression, which is most disturbing for Zimbabweans," Biti told the Zimbabwe Independent during an event to review the 2025 national budget. He expressed deep concerns over the country's current economic trajectory, emphasizing the detrimental impact of what he views as poorly executed policies.

Biti specifically pointed to the exchange rate mismanagement under Finance Minister Mthuli Ncube, which he argued has led to the de-industrialisation of the country. The former minister highlighted the exodus of major companies from Zimbabwe, including Standard Chartered Bank, Barclays, Unilever, and Choppies, as a sign of the worsening economic environment. "Huge companies are leaving the country. There is massive capital flight, there is massive de-industrialisation. Huge companies are retrenching and closing branches. If you go to industrial sites, it is full of grave sites of former functional industrial capital," Biti said.

In the recent 2025 national budget presentation, Ncube introduced a series of new taxes, including a Fast Foods Tax, in an attempt to address the country's economic challenges. However, Biti criticized these measures, suggesting that they would not be effective in the face of Zimbabwe's volatile exchange rate. "They officially devalued it on the 27th of September on their own. So, it is a nightmare for any accountant to do his or her books in a volatile currency. It should have been indexed and calibrated in US dollars," he added.

Biti also dismissed the government's macro-economic projections, particularly the forecasted 6% economic growth for the coming year. According to Biti, these projections are unrealistic given the country's current conditions, including an ongoing El Niño-induced drought and widespread power outages. "The macroeconomic projections do not make sense. You cannot expect the economy to grow by 6% on the basis of assumptions that we have a decent rain season. That is debatable. We are currently going through a heat wave right now," Biti stated, emphasizing the unpredictability of climate conditions.

He further noted that the country is grappling with a severe energy crisis, which he believes is a significant obstacle to any meaningful economic growth. "Expecting that the economy will grow by 6% when we do not have energy, when the country is crippled by a suffocating energy crisis, does not make sense," Biti argued.

Biti also pointed out the risks associated with government spending, particularly on civil servants' salaries. He suggested that once the government fulfills its wage obligations, the exchange rate would experience further disruption, compounding the country's economic difficulties. "Making an assumption on the basis that we will be able to maintain tight monetary and fiscal discipline when this government has never been able to live within its means is also fiction," Biti said.

In closing, Biti stressed the urgent need to reverse the tide of de-industrialisation sweeping across Zimbabwe's economy. He called for a return to sensible economic policies that focus on sustainable growth and industrial recovery. With Zimbabwe's economic challenges deepening, Biti's comments serve as a stark warning about the country's fragile financial situation and the potential consequences of mismanaged economic policies.