Mugabe is dragging down Zim’s economy

Robert Mugabe’s 34-year hold on power is a burden on Zimbabwe’s economy, which continues to shrink while the Zanu-PF government is preoccupied with succession politics at the expense of finding solutions, says economists and political analysts.

Analysts predict that the economy will persist on a downward spiral unless the country resolves its succession problem, and the bad news is that the impact will extend to its regional neighbours, whose economies will have to contend with continued inflows of economic refugees.

A senior Confederation of Zimbabwe Industry official and president of the Mashonaland Chamber, Sifelani Jabangwe, recently revealed that Zimbabwe’s manufacturing capacity utilisation is expected to fall to around 30% for 2014. In 2013 it was 39.6%. Capacity utilisation is a measure of the extent of factories’ use of their installed productive potential. The confederation is the country’s largest body of manufacturing companies.

Industrial production hit an all-time low during the hyperinflation period that peaked after the country recorded 18.9% in 2007; in 2008 it could not be measured because of hyperinflationary conditions under which companies could not give accurate and meaningful economic data.

Following the adoption of the multicurrency regime in 2009, and during the inclusive government period, there was a marked increase in industrial performance with capacity utilisation being recorded at 32.3% for the first half of 2009 and 43.7% in 2010 and 57% in 2011.

The drop to about 30% this year is testimony enough that the economy is once again in dire straights, but economic analysts are worried that Zanu-PF’s succession fights are compromising the government’s ability to tackle the country’s economic problems.

Recently, industry has been grappling with increasing retrenchments. In August alone, Zimbabwe’s Retrenchment Board approved the retrenchment of 623 workers, adding to 4 668 layoffs between January and July this year.

In a report titled Zimbabwe: Waiting for the Future, released in September, the International Crisis Group (ICG) warned of the possibility of the country degenerating into conflict should the economy’s free fall continue. ICG urged Zanu-PF to resolve its succession crisis urgently to avert economic disaster.

Divisions, lack of unity
Zanu-PF is preoccupied with faction fights over who will succeed Mugabe, with one group led by Vice President Joice Mujuru and the other by Justice Minister Emmerson Mnangagwa.

The increasingly public clashes between senior party officials, including Cabinet ministers, highlight the divisions and lack of unity in the party.

President Robert Mugabe’s wife, Grace, has sided with Mnangagwa and has been campaigning against Mujuru, increasing tensions ahead of the party’s elective December congress.

On Tuesday this week, relations between the First Lady and Mujuru hit an all-time low with Grace refusing to shake Mujuru’s hand when the latter greeted the presidential couple at the Harare International Airport on their return from the Vatican. The snub made local headlines this week.

Economist Godfrey Kanyenze told the Mail & Guardian that the succession struggle is toxic to the country’s development prospects.

Kanyenze cited discord in the foreign affairs ministry where deputy minister Chris Mutswangwa has been accusing his boss Simbarashe Mumbengegwi of sidelining him. The two allegedly support rival factions in Zanu-PF.

Power struggles
He said it was disturbing to note that the power struggles were even manifesting themselves at the top. During her rally in Mujuru’s home province last week, Grace revealed Mugabe had lost patience with Mujuru for trying to unseat him and called on her husband to “baby dump” her at the party’s congress in December.

“What we learned from the development of states in Southeast Asia was the importance of unity of purpose and social cohesion. However, it is unfortunate that in Zimbabwe the ruling party is disintegrating at the very top. No investor will come to a country where there is uncertainty bred by the mistrust in the leadership,” said Kanyenze.

“Worse still, Grace has been exposing details of alleged corruption and rent-seeking behaviour which has been happening at the very top.”

He said the resultant economic meltdown would affect Zimbabwe’s neighbours because more citizens would be forced to migrate in search of jobs.

Eddie Cross, a Bulawayo Movement for Democratic Change MP and an economic adviser to opposition leader Morgan Tsvangirai, painted a bleak picture of the economic situation in Zimbabwe as a consequence of Mugabe’s continued stay in office, among other things.

He predicted that the economy would contract by 5% this year.

“Deflation is already at 2% and this will inevitably create a health and social crisis because the country will not be able to fund the health sector. Mugabe’s holding on to power is catastrophic even for the region. South Africa will also feel the impact as Zimbabweans migrate there.”

South African permits
South Africa is in the process of renewing the permits of over 200?000 Zimbabweans to whom it granted an opportunity to work in that country in 2009. The process ends at year end.

A report released in July 15 by Statistics South Africa revealed that most permanent residence permits granted in South Africa are to Zimbabweans, followed by people from the Democratic Republic of Congo and Nigeria respectively.

The government’s coffers have not been spared in the economic decline and the treasury is struggling to pay civil servants. To cope, it is now constantly changing the pay date for teachers, nurses, soldiers and police, among others.

The treasury has attributed the declining revenue to company closures, which have shrunk the tax base, and the underperformance of the mining sector on the back of fluctuating mineral prices on international markets.

But analysts say the succession and Mugabe’s age are also an issue.

Godwin Phiri, a political analyst and former chair of the National Association of Non-Governmental Organisations, said Mugabe’s prolonged stay in power and the country’s failure to solve the succession problem were deterring potential investors.

“International investors who want to plan around Zimbabwe need to know who will take over so that they can at least have an idea of what sort of economic policies to expect.”

“Mugabe certainly needs to come up with a clear succession plan because at the age of 90 anything can happen to him at any moment and that can only increase uncertainty over the country’s prospects as a safe investment destination,” said Phiri.

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