Political bickering ahead of the polls is driving business to the ground.
Members of the country's unity government have been bickering lately over poll dates – Zanu-PF is insisting on elections as soon as Parliament's tenure expires on June 29 and the two Movement for Democratic Change (MDC) formations are arguing that a date should only be set after their concerns about the security sector and media have been resolved.
Economists and captains of industry this week told the Mail & Guardian that business is suffering as investment projects are put on hold. International investors are holding back investment plans due to the increasing uncertainty.
"I see an acceleration of the crisis," said John Robertson, an independent economic consultant. "There is a build-up of dismay. Money that might have come [into Zimbabwe] has gone elsewhere because of the political uncertainty."
That dismay has forced the Zimbabwe National Chamber of Commerce, a conglomeration of businesses, to lead calls for early elections, saying the economy is "grounded by electioneering".
"If people are in an election mode, there is that hold-back, and the country becomes dry in terms of liquidity. So, basically, the election mode is really something which affects quite a number of companies," Davison Norupiri, a regional vice-president for the business chamber, said last week.
Offshore institutions withholding credit facilities
Norupiri said offshore institutions were now withholding credit facilities and waiting for the election phase to pass.
But Robertson said it's going to be a long season. "There has been uncertainty for too long and people have now made the actual decision not to invest. But even after the election they will wait to see what becomes of the election results."
A bank executive who declined to be named said his institution faces closure because its efforts to secure capital from foreign investors have come to nought.
"They were worried by the uncertain political environment and the indigenisation policy," said the banker.
The M&G understands from banking sources that at least four other local banks, desperately in need of capital injections, have been told by South African and European investors that they cannot put money into Zimbabwe because of the political situation.
"We've already seen shrinkage in bank liquidity," said Robertson.
Exacerbating the plight of industry
Kumbirai Katsande, president of the Confederation of Zimbabwe Industries, a group of manufacturing sector companies, warned that the political situation had exacerbated the plight of industry in the country.
Katsande said: "We have started to see further deterioration of local industries. Factories are closing down or have closed down. Losses are mounting. All this points to growing unemployment and desperation."
Several listed companies that were once regional giants are in poor financial health or have closed shop, including food manufacturer Cairns Holdings. Hunyani Holdings Limited has closed its Norton mill, which had initially been put under care and maintenance in the hope that the local paper manufacturing industry would return to viability, while Zimbabwe's sole newsprint producer, Mutare Board & Paper Mills, has also closed.
David Mupamhadzi, an economist, says Zimbabwe is facing deindustrialisation and blames the situation on a liquidity crunch and lack of investor confidence due to increasing political uncertainty. Already Finance Minister Tendai Biti has indicated that the economy could miss growth targets.
"The economy exhibits a number of fundamental weaknesses which may impact on the 2013 projected growth target of 5%," Biti said during his recent economic report for the first quarter.