Mugabe's economic promises hollow

ALMOST 18 months after Zanu-PF won general elections tainted by rigging allegations, a steep economic decline characterised by, among others, the debilitating liquidity crunch, declining capacity utilisation, retrenchments and job losses has made Zanu-PF's lofty ambitions outlined in its 2013 election manifesto appear like a script from a fiction novel.

Since elections in July 2013 the state of the economy has alarmingly deteriorated; it has become more informalised, leading to a severely reduced income base for government now struggling to meet its public sector wage bill obligations.

The ambitious Zanu-PF manifesto speaks of more than US$1,84 trillion being created from the idle value of empowerment assets unlocked from various avenues such as parastatals and mineral reserves.

However, parastatals remain in free-fall. The National Railways of Zimbabwe, Air Zimbabwe, Grain Marketing Board and the Zimbabwe United Passenger Company - to name but a few - remain deeply in debt while bleeding the fiscus, with their employees owed millions of dollars in salary arrears.

The GMB recently sent workers home on two weeks' forced leave as the parlous state of its finances takes its toll. The shambolic state of parastatals makes it virtually impossible for government to derive any value, let alone the intended US$7,7 billion, as they continue to be hamstrung by gross mismanagement and corruption.

Although there has been talk by government of privatising parastatals since the early 1990s, precious little has materialised.

Economist Fanuel Hazvina said most of the parastatals, save for Zesa, are struggling to stay afloat and there is no way government can raise anywhere close to US$7 billion value from them.

"I am yet to identify any other parastatal, except maybe Zesa, that is performing as it should," Hazvina said.

"There is need for serious restructuring of parastatals before government can unlock any value from them."

Unlocking value from mineral reserves will only materialise after massive investment and as economist John Robertson points out, there is need for a complete overhaul of the indigenisation policy for that to happen.

"Unlocking mineral reserves needs huge investment," Robertson said.

"No investors will come to risk their money only to be told government already owns 51% equity. They will go elsewhere."

Robertson said there is need for wholesale changes to the empowerment policy if investors are going to pour millions of dollars to help unlock the country's unexploited mineral reserves.

There is need to intensify beneficiation and exploration activities in mining to unlock value as falling commodity prices mean minerals in their raw form will not bring much cash to the country.

The manifesto also reveals that Zanu-PF intends to create value of US$7,3 billion from the indigenisation of 1 138 companies across 14 key sectors of the economy.

However, there has been more confusion than progress on this front.

Contradictory statements from various government officials has mired the policy in confusion, with senior government officials like Vice-President Emmerson Mnangagwa quoted as saying the law needs to be amended to attract foreign direct investment and others, such as Finance minister Patrick Chinamasa, saying the policy only needs clarification while Indigenisation minister Chris Mushowe has even proposed thresholds as high as 99%.

As at the end of last year, only 15 out of the more than 60 Community Share Ownership Trusts were operational. The other community trusts are yet to be funded, indicating the US$7,3 billion envisaged remains a pipedream.

As far as job creation is concerned, what the ruling party presented in its manifesto is far removed from reality. Zanu-PF promised to create 2 265 million jobs across key sectors of the economy. The grim reality renders this objective ambitious at best, but delusional at worst.

An estimated 10 companies closed every month since the beginning of last year, with more than 6 000 employees retrenched during the same period, severely depleting government coffers as tax revenues declined.

Zimbabwe Congress of Trade Unions secretary-general, Japhet Moyo, recently revealed that 52 companies had retrenched workers last year. These, he said, include Grain Marketing Board, Zimbabwe Fertiliser Company, Nissan Zimbabwe, PG Industries, First Mutual, Tristar Insurance, Cargill, Beta Bricks, Tetrad Investment Bank, Stewart Bank, CFI Holdings and Metbank.

Hundreds of companies have also liquidated or are under judicial management.

Just how broke government is as a result of these job losses is reflected in government not only failing to pay salaries on time, but being forced to stagger annual bonuses as well. With the proposed labour reforms, which will make it easier to retrench, job losses are set to multiply, making a mockery of Zanu-PF's employment creation projections.

Other ambitious objectives in the manifesto which are yet to be realised are a whopping US$300 million for the Presidential Agricultural Input Support Scheme as well as US$20 million for the Presidential Scholarship Programme.

Zanu-PF also speaks of a 9% growth in GDP by 2018.

the economy shrunk by about 3% last year, and will continue to shrink unless there are significant changes in government policies to restore investor confidence and open up critical lines of credit, among other measures.