SW Radio Africa (London)

15 April 2014

Zimbabwe: Nation Faces Imminent Economic Collapse

Photo: Antony Kaminju/IRIN
A woman sells vegetables at a food market in Harare.

As Zimbabwe turns 34 this week indicators are that the country is facing imminent collapse due to a combination of economic mismanagement and bad governance, experts and opinion leaders have warned. Reports this week said 176 companies were deregistered while 634 more are expected to be struck off the register in the next three months. According to a notice from the Registrar of Companies, the majority of the affected entities are in the manufacturing and investment sectors.

In another development, a key survey said about 70 percent of Zimbabwe's export companies have closed in the last decade. Mike Nyamazana, a researcher in the Zim Trade survey, reportedly said the few remaining exporting companies would only be able to increase their levels of exports if the government comes up with export supporting policies.

Earlier this year the ZCTU reported that about 9,500 jobs were lost last year while 75 companies were closed. In 2013 the National Social Security Authority said over 700 companies had closed in Harare since 2011.

It also emerged that the Grain Marketing Board (GMB) recorded a 59 percent decline in maize intake during the 2013/14 marketing season. The parastatal said it received 47,000 tonnes of maize against 131,000 tonnes during the previous season, ZBC reported Sunday. Last month the GMB said it was owed $2 million by government as the parastatal was being forced to finance the state's social programmes, such as grain provision to poor families.

Economist and MDC-T legislator Eddie Cross said the situation in the country points to imminent economic collapse: 'I have no doubt that that we are facing imminent crisis in economic terms. In fact, we are in the middle of the crisis now. And it is extremely severe. Exports have declined, we are short of cash, no investment is coming in and nobody is able to borrow and a number of banks are close to liquidation.' Cross said since the July 31st election last year there has been a 'collapse of confidence in the private sector. He added: 'The business community has taken a large amount of capital out of the system. About $1.5 billion left the stock market and about $1 billion more left the banking sector and the capital flight has continued up to now.'

According to Cross this has led to a sharp reduction in economic activity, something which has in turn led to a fall in revenue collection. Cross said ZANU PF should 'accept that it needs help' and re-engage with both the MDC-T and the outside world to stop the total collapse of the economy.

MDC-T leader Morgan Tsvangirai recently said: 'Mugabe cannot provide legitimacy to the country.' He added: 'Mugabe will look for me you shall see.'

The party's national organizing secretary, Nelson Chamisa, reportedly said the performance of the ZANU PF government is so bad that by comparison the colonial regime was 'better' in providing basic services.

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InFocus

Zimbabwe Faces Economic Challenge

A woman sells vegetables at a food market in Harare.

The economy remains under pressure with companies reportedly laying off workers or shutting down, unemployment and inflation rising while the government looks seemingly clueless on ... Read more »