A new Zimbabwean government should be able to stabilise the ruined economy quickly, but would face a much bigger task in returning it to sustained prosperity, analysts say.
With President Robert Mugabe in the worst trouble of his 28-year rule, attention is turning to how quickly the economy could be restored if opposition leader Morgan Tsvangirai took over.
Mugabe’s ruling Zanu-PF party has lost control of Parliament for the first time and although the presidential results have still not been released from the March 29 poll, analysts say Mugabe would be humiliated in a run-off against Tsvangirai.
If Tsvangirai does take power, his first priority will be to reverse an economic meltdown that has given Zimbabwe the world’s highest inflation rate, more than 100Ã‚Â 000%.
”I think Zimbabwe now shifts from moving down a path of decline to a path of recovery,” said Chris Hart, chief economist with South African asset management firm Investment Solutions. ”A full recovery is probably only five to seven years away.”
Four of every five Zimbabweans are unemployed and many are battling to stave off malnutrition amid chronic shortages of meat, bread and other necessities. Millions have fled, mostly to South Africa, in search of work and food.
Mugabe’s government has responded to the crisis by ordering the central bank to print money, reducing the Zimbabwean dollar to a virtually worthless currency.
Slaying the inflation dragon is likely to be the easiest task for Zimbabwe’s new leadership.
Tsvangirai has indicated he will clamp down on the excessive growth of money supply and allow the currency to trade on the free market, as was done in Brazil and other nations that tamed hyperinflation.
A new government would also be able to tap into massive financial support from the international community, led by former colonial ruler Britain and the United States, both of which have slapped sanctions on Mugabe’s government.
British experts estimate Zimbabwe will need three times the $350-million a year in international aid it currently receives to help it back on its feet, a British government source said.
”We are working with the World Bank and other donors in preparing to support recovery as soon as positive political change comes,” said a spokesperson for Britain’s Department for International Development.
The International Monetary Fund would likely take the lead in helping Harare pull back from the abyss through an emergency stabilisation programme designed to address fiscal imbalances, restore monetary policy credibility and boost exports.
The strategy, which would be similar to the austerity programmes embraced by Brazil and other nations in the 1990s, would require a steely discipline on the part of government and strong support from Zimbabwe’s suffering population.
”The current estimates are that it could take about a year to get inflation under control, and that year would be very crucial in determining whether public patience with this process can endure,” said Anne Fruehauf, Southern Africa analyst with the Control Risks consulting group in London.
Western nations and international agencies would be expected to increase food and other humanitarian aid to Zimbabwe to help offset shocks from the fiscal belt-tightening and other reforms.
The heavy lifting will come when officials attempt to revive agriculture, mining and tourism — the traditional pillars of the economy — after prolonged neglect that has left power stations, railways and key infrastructure in disrepair.
The government will face conflicting pressures, with foreign investors looking for it to restore credibility to fiscal and monetary policy and millions of Zimbabweans clamouring for a swift improvement to their standard of living.
Foreign investors deserted Zimbabwe after the government began seizing thousands of mostly white-owned farms in 2000. A plan to transfer majority control of foreign-owned mines and banks to Zimbabweans has further chilled the investment climate.
Tsvangirai is expected to throw out the proposed mining and banking legislation and overhaul the farm policy, which is seen as the key to boosting agricultural production and employment.
The demise of agriculture in Zimbabwe, once a net food exporter and the world’s second biggest tobacco grower, has let South Africa and others make inroads in those markets.
”Zimbabwe was perceived as a key investment destination by regional and even emerging-markets standards prior to the start of the current economic meltdown,” Renaissance Capital investment group said in a research note.
”We believe it has the potential to recover should an emergency stabilisation programme be implemented with the support of the international community.”
‘We will conquer’
Mugabe declared on the polling day on march 29 he was ready to romp to another victory to win a sixth uninterrupted term.
”This time around, like the last time, very good. I rate them in the same way, that we will succeed and we will conquer,” he said responding to a question about his prospects of victory soon after casting his ballot.
But it took five days after polling for Mugabe to make only the briefest of public appearances and Thursday’s clip on state television only showed him meeting with African Union monitors rather than any words from the president.
There have been widespread foreign media reports that he has met security chiefs to work out an exit strategy following indications that he may have lost to opposition leader Morgan Tsvangirai who Mugabe said would ”never, ever rule this country”.
Rumours have also been swirling around about him possibly preparing to depart for a foreign country where he live out his twilight years in exile.
Former Malaysian premier Mahathir Mohamad, who has been one of Mugabe’s closest allies over the years, told reporters in Kuala Lumpur on Thursday that ”if he wants to come here, the [Malaysian] government should welcome him.”
”If he has lost, he has to accept the decision of the people, that is the best thing he can do,” he added. – Reuters, AFP