Financial Gazette (Harare)
Nelson Chenga
25 October 2008
Harare — THE list of the country's failed or abandoned economic recovery blueprints reads like a table of contents of a monstrous doctoral thesis: "How not to run an economy".
As far back as the year 2000, the central bank, which controls the financial levers of the economy, had seen the economic recession gaining momentum like a loose typhoon in the making.
It pressed the alarm button, but no one bothered about the shrill calls for the country to either change course or brace for the worst.
The twister struck and it did so hard. The results of its destructive blow are evidently clear today for the whole world to see.
And after eight years of economic devastation, the country's economy is now literary down on its knees.
Agriculture, once the backbone of the economy, is now a pale shadow of its former self.
A robust industry of the 1970s up to the year 2000 is long gone, decimated by a crushing economic crisis.
Inflation, which was manageable in the late 1990s, has mutated into a Titanic of unimaginable proportions.
Analysts trace the country's economic collapse to, primarily, the unbudgeted payouts of gratuities to more than 52,000 independence war participants in 1997. This was compounded by Zimbabwe's military adventure in the Democratic Republic of Congo, which at its peak, gobbled an estimated US$1 million a day.
Then came the unplanned land seizures in 2000, which destroyed the key agricultural sector.
What followed thereafter was a raft of recovery blueprints to roll back the tide of inflation, but these could not pull the economy out of the woods.
As of July, year-on-year inflation was quoted at 230 million percent, an indication that the country's economy is on the boil.
It was mainly the scary inflation outlook that jolted the Reserve Bank of Zimbabwe (RBZ) to press the panic button, giving birth to the Millennium Economic Recovery Programme (MERP) in 2000.
At the time, inflation had accelerated between 1997 and 1999 from an average 18 percent to 70.4 percent by October 1999. This was hard on the heels of a phenomenal decline in Gross Domestic Product from 10.6 percent in 1996 to almost zero in 1999.
In August 2001 the then RBZ governor, Leonard Tsumba, in his assessment of MERP, said: "High inflation levels have progressively wilted the country's competitiveness. The loss of international competitiveness invariably implies diminishing exports and foreign earnings."
He cited the deteriorating terms of trade, declining international commodity prices; redu-ced balance of payments, a decline in both investments and loans capital flows; the accumulation of arrears on national debt and the pervasive parallel market activities as some of the key factors that were to weaken the country's recovery eff-orts.
"The weakening performance of the economy was reflected in contraction in manufacturing and mining. Manufact-uring and mining sectors were depressed, against the background of week domestic and export demand, foreign excha-nge shortages, cash flow difficulties, rising production costs and energy shortages," said Tsumba.
Unfortunately efforts to avert an economic Tsunami have not been entirely successful beca-use they were either half-hearted or that there was change of course mid-stream.
The country's exch-ange rate has moved from $50 per United States dollar in August 1999 to about $1 billion on the illegal parallel market as of yesterday.
Low interest rates in an environment of high liquidity have effectively increased the pressure on the exchange rate.
In March 2005 the then Zimbabwe Congress of Trade Unions economist, Godfrey Kanyeze, hinted at some of the root causes of the country's continued failure to resuscitate its ailing economy.
He said: "As things stand, without clearly spelt out national and sectoral targets, the pursuit of national development is akin to a ship without a rudder on a night without a star."
And when Gideon Gono took charge of the RBZ in November 2003, it became apparent that an economic turn-around required more than just monetary policy alone.
Gono has worked tirelessly to resuscitate the country's economy, but he has failed to gain support from the politicians, whose endless infighting, has derailed recovery efforts.
"The problem we are facing in our country is of corruption across the country. Corruption, corruption, corruption has destroyed this country," said Gono addressing ZANU-PF delegates at an extraordinary congress in December last year.
His statement came after many such comments that clearly indicated why all the past recovery programmes bore little fruit.
"We cannot let an economy die because of individuals. We are all responsible for the success or failure of this economy...I think we have allowed ourselves to go down so much so that we now see indiscipline everywhere in our country. Lawlessness has become the order of the day yet we need -- all of us -- to play our role to make things work," said Gono in February last year.
Beneficiaries of, for example, seed, fuel and foreign currency sourced for purposes of importing critical inputs have diverted the largesse for personal use and because no action has been taken against them, the trend has continued.
An all-inclusive government is probably an answer, but those that will be part of that political arrangement need to have a collective will to implement radical changes to resuscitate the economy. But events since the power sharing agreement was signed on September 15 seem to point to more problems for the economy.
Deep seated mistrust between ZANU-PF and the Movement for Democratic Change has been the main driving force behind the delays in resolving the economic crisis.
Perhaps the authorities should have heeded top-shelf advice from former justice and legal affairs minister, Eddison Zvobgo who told his colleagues in Parliament while debating the ballooning budget deficit: "We have been spending money without production as if the world owes us a living.
"We have lacked the political will to put things right."
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