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By Alexander Jones International Banker
He was once known as the "breadbasket of Africa", and after decades of severe economic mismanagement that plunged the country into despair and ruin It now seems that Zimbabwe has more chance to dream of a more prosperous time.
But if such a dream can come true, it will take a radical turnaround of the disastrous policies implemented by former leader Robert Mugabe. But with the 37-year rule of the country's notorious autocrat now in the wake of November's military coup, a renewed sense of belief now seems to permeate Zimbabwe under the new leadership of Emmerson Mnangagwa.
Indeed, when one looks at the current situation in the nation of southern Africa, one could argue that the recent change of the guard came just in time, especially with respect to the situation. ;economy.
Although the beginning of the decade ushered in a ray of economic hope for Zimbabwe, which has experienced exceptional annual growth of more than two figures for several years, at a time when the Zanu-PF party ( Zimbabwe's African-Patriotic National Front) shared power with the Zimbabwean MDC (Movement for Democratic Change) to create the Government of National Unity; and during this time, the opposition party was able to exercise significant control over the Ministry of Finance. During these years, exchange controls were abandoned; fuel and food shortages that had already weakened the country quickly disappeared; and inflation – which had reached comic levels – had begun to change dramatically
. But in 2013, Zanu-PF once again took full control of the government. Since then, the economy has been bent towards the territory of the recession, the International Monetary Fund (IMF) observing last year the emergence of persistent and damaging economic stresses, including a severe drought in the country; slow implementation of the reforms, which has created an unsustainable fiscal imbalance in high public spending and slow incomes; limited access to foreign contributions; reduced net capital flows; and the decline in investor confidence, which has resulted in a severe shortage of liquidity. In response, the IMF noted that the government had "introduced capital and current account controls and quasi-money instruments into the dollarized economy". To exacerbate the country's unhappiness, expansionary fiscal policy has squeezed out the private sector, while excessive spending on supporting the agricultural sector in the country has led to insufficient spending in key areas, such as infrastructure and social spending. .
"I am working on building a new Zimbabwe: a country with a thriving and open economy, jobs for young people, opportunities for investors, democracy and equal rights for all ", recently said Mnangagwa. New York Times . The first 100 days of the new leader have just disappeared, the new president has quickly put forward his economic achievements, saying recently in a video on Facebook that he has adopted "a bold and responsible budget that has significantly reduced the waste, reduces the law on indigenization to open up the economy to investment, facilitated greater use of mobile money to combat liquidity crises and reduce the rights of 39 excise on gasoline and small bank transfers ". He has also made efforts to bring Zimbabwe back to the fore: "Internationally, we have worked hard to build our international relationship and to make investments. Until now, we have got $ 3 billion in investment commitment from some of the largest companies in the world … After 100 days of action, we are on the right way, and we will continue to work to accelerate the pace of reform. "
BMI Research, a UK-based badytical research firm, calls Mnangagwa a development leader, reformer, who will provide Zimbabwe with a solid platform for sustainable growth." The company sees Zimbabwe's budget deficit Significantly reduce from next year; Although the country is experiencing a brief recession this year as the liquidity crisis continues to weigh on production in import-dependent sectors, BMI sees the growth of the economy. According to the latest report from the company, efforts to consolidate Zimbabwe's fiscal position "will face headwinds of slow income growth and the costs of holding money." general elections, scheduled for 2018. "That said, the" fiscal consolidation margin has improved following the appointment of a more reforming president to Emmerson Mn. " angagwa, and we see the deficit shrink further in 2019 ", while import growth is also expected to increase from next year.
However, everyone in the country – or even in the world – is not convinced that Mnangagwa is the man to turn Zimbabwe's fortune on. As recently observed the Zimbabwe Mail, "banking queues remain, the black market is in full swing, prices remain high and companies still struggle to make offshore payments." Of course, it will take a gigantic effort to restore economic stability, but Mnangagwa is no doubt aware that his political rivals are already starting to sharpen their knives, ready to hold the president to account if there were to be few significant achievements . in a close future.
It will be no surprise that the Mnangagwa administration wants to focus on employment. While the statistical authority of Zimbabwe estimated the country's unemployment rate at 11.3% in 2014 – its last esteemed official – the largest trade union of workers, the Zimbabwe Congress of Trade Unions, announced the government's official statement. last year that the unemployment rate was barely 90%. According to some recent estimates, this figure is 95%, although this high figure seems to be calculated on the basis of the very small number of persons formally employed on a payroll, net of source deductions and pensions. huge proportion of workers who make their living in the informal economy instead. Nevertheless, such figures highlight why the government is eager to create more formal jobs.
Relieving youth unemployment, in particular, is one of the biggest challenges of the new government. One of Mnangagwa's most anticipated remedies for this problem is the introduction of a revolving fund aimed at strengthening the country's technological capabilities in information and communication technologies. , a sector that had already suffered from lack of investment. According to the supervisory authority of the Zimbabwe Posts and Telecommunications Sector, the project should "equip young people with the skills and resources necessary to enable them to create jobs not only for themselves, but also for children. other". 19659003] Money is also needed in Zimbabwe. With the tumultuous period of hyperinflation that ended the Zimbabwean dollar nearly 10 years ago, the country has since relied on the US dollar and, to a lesser extent, the southern rand. -African. The situation was not helped by a shortage of money, which became so disastrous that at one point, people were sleeping outside the banks in order to be among the first to withdraw the maximum limit of $ 20. An overvalued real exchange rate is also detrimental to Zimbabwe's external competitiveness, which should place Zimbabwe's currency in the government and central bank's priorities.
In addition, many believe that a more efficient management of the country's abundant resources will be essential long-term prosperity, especially following policies of agricultural land confiscation of the Mugabe era, which resulted in food shortages and the underutilization of irrigable land that once facilitated the production of maize, cotton, tobacco and sugar cane. Nevertheless, Zimbabwe is the world's fifth largest producer of lithium and has the third largest platinum reserve. With the increasing demand for electronic and medical equipment, rechargeable batteries, smartphones and electric cars, the potential for global investment is high, especially in the mining sector.
Investors will probably remain cautious for the moment. become obvious. For example, Russian Foreign Minister Sergei Lavrov, during a tour of the country where he met with Mnangagwa and senior government officials, signed an agreement to create a special economic zone for Russian companies intended for to the export. Lavrov also revealed that Russia is establishing a military alliance with Zimbabwe, is pursuing a joint $ 3 billion platinum project near the capital Harare and is also studying cooperation in the country's diamond sector.
The IMF also expects huge collective effort to put the Zimbabwean economy back on track. IMF spokesman Gerry Rice said in November that the multilateral institution was "ready to support the authorities to devise policies to restore stability and growth", but that an international effort would be needed to revive and reintegrate the Zimbabwean economy. . Rice also confirmed that the IMF would not be able to offer Zimbabwe financial badistance until the country repays its debt to creditors like the World Bank. The total amount owed to these lenders amounts to about $ 5 billion. This view is supported by BMI, which has recently estimated that a greater margin of "re-engagement with the international community, particularly with concessional lenders" will also increase the likelihood of a successful reintroduction of funds. a local currency.
Chinamasa estimates that Zimbabwe's economy can grow up to 6% this year, up from the government's previous forecast of 4.5%, although some feel that this is too optimistic. Nevertheless, there seems to be a real belief in the country that a new economic and political era has now begun. Of course, it will take a lot of work to restore Zimbabwe to its glory days; and although not everyone is convinced that Mnangagwa is the man to accomplish such a task, for the moment Zimbabweans can dream once again of a better and more sustainable future.
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