Zimbabwe’s deteriorating economy is a ticking time bomb which could trigger social unrest, analysts have warned.
BY MTHANDAZO NYONI
The economy is groaning six years after the introduction of a multicurrency regime which was expected to take the country to the Promised Land.
The prevailing cash shortages have exposed government’s shortcomings after plans to introduce the bond notes were shot down by banks, industry and citizens.
This comes as companies continue to struggle while senior government officials are implicated in corrupt activities involving many millions of dollars exposed in the media and confirmed by the Auditor-General’s reports.
Evidence of this economic crisis is failure by the Zimbabwe Revenue Authority (Zimra) to meet its revenue collection targets. Earnings for the first quarter of 2016 were at $724,9 million against a target of $861,8 million.
Recently, pockets of resistance have been witnessed across the country as individuals and civic groups have taken it upon themselves to confront President Robert Mugabe and his government, demanding that they step aside.
A recent ban on imports sparked riots at the Beitbridge Border Post as cross-border traders fight for their turf — their last hope as the economy has failed to create new jobs.
Analysts told Standardbusiness that government has failed to arrest the economic decline.
“At the rate at which the economy is going down right now, we will be suffering severe shortages of most important goods including food long before the end of the year,” said economic analyst John Robertson.
Robertson said the worst affected companies would be those that would not be able to obtain fuel or would suffer power cuts because production would stop. Next in line, he said, would be the companies that produced valuable goods or services, but failed to sell them because people would have no money.
“Lower wages or late wage payments will reduce demand from the shops, so these shops will also pay less tax. Government will then buy less from all suppliers and this will force down the delivery and quality of government services.”
He said signs of civil unrest were already showing, evidenced by the violence that broke out at the POSB and some other banks. Police road-blocks had also been threatened with violence.
Another economic and policy analyst Butler Tambo said Zimbabweans were likely this year to have one of the bleakest Christmas holidays post 2009 due to the plans to introduce bond notes.
“The move by the RBZ has already caused pandemonium as most people fear the return of the Zimbabwe dollar and statements from the minister of Finance [Patrick Chinamasa] that there is no going back on bond notes have only worsened the situation, resulting in the current run on banks which could trigger a banking crisis with seismic effects on the economy,” Tambo said.
Tambo said investor confidence had also taken a huge knock as $1 billion in shareholder value was lost on the Zimbabwe Stock Exchange in the first half of the year compared to the same period last year.
“It will become extremely difficult for any investor to take their money out of Zimbabwe or even repatriate any profits or dividends back to their countries of origin and this can only cause the same investors to divest from Zimbabwe,” he said.
However, Reginald Shoko, a Bulawayo-based economic analyst said even though Zimbabwe’s economic climate was bad, there would be no civil unrest as “Zimbabweans are general survivors who always find a way to make a plan”.
Shoko said there was need for everyone to pull in one direction.
“It’s high time we agree as a country on what’s best for us and focus on such. The current reactionary tendencies will not help the economy. People need to be proactive,” he said.
Tambo said there was no political will to arrest the current crisis because part of it was caused by government’s inconsistency on policy. He said government officials were pronouncing discordant policies and interpreting them in various ways, which were often political and factional.
Clive Mphambela, an economic analyst blamed the government for being inconsistent and failing to consult. He said government consisted of a clueless bunch “that is hitting and missing at every turn”.
Analysts say government has to engage social partners and sit down with business and labour to map the way forward because the days of blame games were over.
Shoko said there was need to streamline “too many unnecessary ministries” because the civil service wage bill was “unsustainable for an economy like ours”.
Robertson said the country needed very big, imaginative and brave solutions that would immediately re-generate confidence and make the country attractive to new investors.
“Basically, government has to stop interfering and start removing every kind of control that was put there simply to force obedience and compliance. Government should facilitate, not regulate,” he said.
Mphambela said some kind of miracle was needed to shake leaders “from their deep slumber and send the message that they cannot continue to take the people of this country for granted”.
“In other places, the entire government would by now have honourably resigned and made way for more competent citizens to take their stead. Sadly in Zimbabwe, we can now only wait for the elections, which are coming in 2018, but surely things must have changed by then,” he said.