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Zimbabwe’s economy implodes


Ngoni Chanakira

ANALYSTS say last week’s five-day stayaway will increase unemployment levels and exert more pressure on an already fragile and contracting economy.


However, Harare executive mayor Elias Mudzuri says Zimbabweans have already suffered enough and therefore have “nothing to lose anymore”.

Last year more than 400 companies closed shop making at least 350 000 jobless.


Agriculture has seen a further 500 000 being made redundant sending the country’s unemployment figure up to 75% – the highest in the region. South Africa’s unemployment rate is 30%.


The mass action organised by the major opposition party, the Movement for Democratic Change (MDC) resulted in commerce and industry grinding to a halt.


The stayaway overshadowed the National Economic Consultative Forum (NECF)’s deliberations at the prestigious Harare International Conference Centre on Friday to discuss the country’s tattered image and solicit ideas for economic progress.


The NECF, comprising 150 “top business executives” appointed by President Robert Mugabe to advise on economic recovery, admitted that all was not well in Zimbabwe.


The organisation said dialogue was needed in Zimbabwe to arrest various issues such as incessant macro-economic instability and serious balance of payments problems attributed to a decline in exports from US$2,5 billion in 1998 to US$1,3 billion in 2002.


The NECF also admitted that there was a “declining quality of life among Zimbabweans as a result of high unemployment, declining real incomes and deterioration in the quality of public amenities including health, transport and education”.


Mugabe however told the SABC on Sunday night – two days after the event – that the mass action had “failed totally” and Zimbabwe was being “demonised for being principled especially on the land issue”.


The president however admitted that he had “highly-educated experts” in his government as economic advisors who were “not addressing major issues timely”.


Commenting on the latest cash crisis facing Zimbabwe Mugabe said: “We have highly-educated experts who think a situation must be handled or addressed in a normal way. They demand bookish rules and bookish norms. We are in a state of war and we must look at vital points. We are going to overhaul the situation soon.”


Economist John Robertson said it would prove very difficult for Zimbabwe to “overhaul the situation soon” and “get back on track” because the economy is crippled anyway.


In an interview, Robertson said: “The economy has been crippled further after the stayaway. However, when you are barely moving some people cannot even tell the difference.”


He said what worsened the economic crisis was that the political front was also a cause for concern.


Mayor Mudzuri, interviewed by allAfrica.com in Washington DC en route to the second annual international mayor’s conference in Denver, Colorado, last week said: “Harare people have nothing to lose by going to the streets. Actually it’s a demonstration to say the government is not treating them as normal human beings…I wouldn’t call it a strike; it’s a demonstration to show that the government is no longer for them. The health system has collapsed. There is no money in the banks. There is no food in the shops. There is no sugar. Almost everything is not there, which means that the government has seriously failed and the people are now saying, ‘Enough is enough’.”


Several companies have already hinted that Zimbabwe needs to improve its macroeconomic fundamentals for them to survive let alone earn elusive foreign currency for the nation.


The companies are struggling to exist and made losses for the year ended December 31.


In statements accompanying their results the companies hinted that this financial year could prove another nightmare for them.


Companies such as Hippo Valley Estates Ltd (Hippo), National Foods Holdings Ltd (Natfoods), Pretoria Portland Cement Company Ltd (PPC) and Zimbabwe Sugar Refineries (ZSR) have already warned that their performance would be disappointing if the economic climate did not change. Some of them have embarked on shifts and laying off employees.


International banking group Barclays Bank of Zimbabwe Ltd (Barclays) revealed that it was scaling down operations, citing the country’s unstable economic situation.


PPC, which is also listed on the Johannesburg Stock Exchange and whose major operations are in South Africa, last week blamed its R9,6 million operating loss at Porthold on the difficult socio-economic conditions prevailing in Zimbabwe.


The company said Porthold was “unlikely to contribute to earnings while the socio-economic crisis in Zimbabwe continues”.


Out-going Hippo chairman Len Bruce said turnover had declined and a loss before tax of $11,2 billion was incurred for the year ended December 31 2002, compared with a profit before tax of $5,3 billion for 2001.


Natfoods chairman Godfrey Gomwe said his company had made a $43,4 million loss which was however much better than the previous $836,8 million figure.


He said revenue for the year at $49,6 billion was down by 13% against the previous year’s $56,8 billion.


ZSR, which posted a loss before tax of $826,4 million compared with a loss of $124 million sustained during the corresponding period previously, also blamed its poor showing on the prevailing economic conditions.


Barclays managing director Alex Jongwe said against the background of a shrinking economy and business closures, it would be extremely challenging in future to achieve “very good results”.


Jongwe said: “The bank will focus its efforts to ensure that it is well positioned to hold its own in this difficult environment.”


Mugabe however insists the economy will get back on track.

“Who has pushed who? This is a complete illusion,” he told SABC. “I am for a fight. I still can punch.”


Mudzuri said: “We must learn to come out of government by election not to remain in power by force. I think Zimbabwe will be a unique place because so far it has demonstrated that people are determined to have a proper democracy by putting in the opposition in such numbers. If this world looked at it and encouraged it you would see that Africa would change, starting with Zimbabwe, allowing different voices to say what they can say, and be elected.”

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