Zim economy takes backseat

THE infighting in ZANU-PF has dealt a body blow to the country’s troubled economy as key players in the governing party have taken their eyes off the ball to concentrate on either defending or enlarging their turfs.

ZANU-PF is currently in the throes of a bitter succession fight in which those behind it are attempting to position themselves or their proxies in strategic positions with a view to succeeding President Robert Mugabe whenever he exits the grand political stage.

It is said that the party is torn between two main factions, one linked to Vice President Joice Mujuru and the other one associated with Justice Minister Emmerson Mnangagwa. Mujuru and Mnangagwa have both denied leading factions. Initially, the Mujuru camp was said to have been headed by retired general Solomon Mujuru, who was rumoured to have been doing the bidding for his wife, the Vice President. When the decorated liberation war fighter passed on in August 2011, the “mantle” was passed onto the Vice President, it is said.

While both camps are fiercely loyal to President Mugabe, they are vicious towards each other, despite belonging to the same party. Mnangagwa’s backers have come out in full force to denounce their rivals. Similarly, the other side has been digging in their heels, plotting to strike back. In the past, it was difficult to unravel the existence of the factions, and even the party itself was on record denying their existence, but not anymore.

ZANU-PF leaders are now openly speaking out against factionalism, and that includes the purported faction leaders themselves, which adds to the mystery. But in the last few weeks, factionalism has reared its ugly head in the most dramatic manner. Accusations and counter-accusations have been flying across the table, with even junior officials taking aim at their seniors.

There was also spirited lobby to forestall the appointment of former Reserve Bank of Zimbabwe governor, Gideon Gono, as senator for Buhera. But as the factional fights swing back and forth like a pendulum, it is the country’s economy that is bearing the sharpest brunt of the scourge.

But as the factional fights swing back and forth like a yo-yo, it is the country’s economy that is bearing the sharpest brunt of the scourge. Economic analyst, Joseph Sagwati, said the economy has been left unattended to because of the bickering in the ruling party. He argued that politics defines a country’s growth trajectory, adding that Zimbabwe’s economy will suffer as long as the political situation does not show a defined direction.

“Everyone is pre-occupied with their political future. This situation is not likely to end soon. This tension will be with us up to the congress and a few months after as politicians will be reacting to the outcome while investors digest it,” said Sagwati.

“We have very sensitive investors who sit on the fence if they are not sure with the direction a country is taking and it is the economy and majority that suffers. They will be saying we do not have order. There should be signs of economic growth and political stability if they are to come to the party and dine with us.”

A Confederation of Zimbabwe Industries (CZI) survey revealed this month that capacity utilisation in the manufacturing sector has retreated by 3,3 percentage points to 36,3 percent this year from 39,6 percent 12 months ago. The dearth of the manufacturing sector could spell doom for the country given its centrality in the working of Zimbabwe’s economy.

The industry is closely linked to agriculture, the country’s economic mainstay, with an excess of 60 percent of manufacturing value added either related to agro-industry or to the provision of inputs to the agricultural sector. In broad terms, the sector produces in excess of 6,000 products or commodities ranging from food and clothing to fertilizers and chemicals, metal products of all kinds, electrical machinery and equipment and motor vehicle assembly.

As if to give credence to this relationship, the 2014/2015 agricultural season has gotten off to a bad start. Zimbabwe requires at least US$2,5 billion to guarantee a successful farming season but government has struggled to even raise a quarter of that amount.

Finance Minister Patrick Chinamasa recently said government was mobilising about US$252,3 million for the 2014/15 agricultural season, which is barely adequate. Analysts said the infighting in ZANU-PF was also having an impact on farming preparations and the crisis in the manufacturing sector. This comes as government has reviewed the 2014 Gross Domestic Product (GDP) growth targets down to 3,1 percent, from an earlier projection of 6,1 percent.

GDP is one of the primary indicators used to gauge the health of a country’s economy. It represents the total dollar value of all goods and services produced over a specific time period. Before the economic meltdown, Zimbabwe’s GDP hovered above US$10 billion but it is now down by nearly half. The writing has been on the wall for some time.

An official from pay-as-you-go pension scheme, the National Social Security Authority (NSSA) recently said at least 10 companies have been closing down every month since the beginning of the year. This mirrors unmitigated haemorrhage in industry. The worst affected towns have been Bulawayo, once Zimbabwe’s industrial hub, followed by Mutare, whose situation remains dire despite the existence of diamonds in Chiadzwa.

Economist, Takunda Mugaga, said the acrimony playing out in the governing party does not auger well for both political and economic stability.

“Statements made by people who are expected to unite a nation are more dangerous than their actions. The economy is the first casualty. If there are issues and problems there must be a channel to address them not washing dirty linen in public. During the Government of National Unity there were channels that the Prime Minister and President addressed their differences, but more often than not never in public. This gave investors confidence to come here and the economy benefited,” said Mugaga.

“If there is a rift on the political structures it will create an environment where every investor will not be comfortable to bring their money here. It does not give investors assurance that Zimbabwe is a safe investment destination. This rift is more to do with characters than fundamentals a clear sign of policy inconsistency to party structures that discourage showing how divided a party is in public,” he added. Financial Gazette