Zimbabwe economy at its worst: Biti
By Prince Njagu
HARARE – The Movement for Democratic Change (MDC) Renewal Team addressed journalists at their offices in Harare, under the topic, “Structural economy to Regression” which looked into the prevailing state of the economy.
Economic indicators show that the per capita economy is as low as it was in 1958.
In the 2015 national budget presentation; Minister of Finance Patrick Chinamasa admitted that 2 million jobs had been lost whilst 6000 companies had closed shop.
“We are in a very challenging economic environment; industrial sites have become graveyards”, said Tendai Biti MDC Renewal Team Secretary General.
The post Government of National Unity (GNU) period has seen a shrinking in the Zimbabwean economy and this has seen the collapse in social service delivery across the country.
Government should inject cash into meaningful local business’ ventures so as to revamp local industry and boost exports.
Capital investment in local manufacturing and processing industry would boost exports and so correct the in-balance in the countries balance of trade; particularly exports.
Introduction of the United States dollar; multi-currency system in the economy boosted confidence and a handful of foreigners were now willing to engage local businesses.
Dollarization not only saw a boost in local businesses but basic commodities were now available on shop-shelves but the general populace didn’t have enough disposable income to purchase the products.
Government domestic debt has collapsed the financial service sector whilst crowding out capital to the private sector.
Since post independent Zimbabwe; 2014 has been the only year that the government has failed to pay civil servants bonuses in time and has had to shift salary pay dates.
Net revenue inflows to the government have collapsed with a budget deficit in real terms of 30% being recorded in 2014 (the nominal deficit being 9%).
This shows how bad the economy is and the government has now engaged in heavy taxing of its citizenry in an attempt to raise money for salaries and to correct the budget deficit.
As was indicated by Biti that the government was living under a budget deficit; were it is killing a rat but eating an elephant.
With fuel prices going down globally the Zimbabwean government has engaged in a heavy taxing exercise which has seen the price of fuel slightly going lower.
Fuel prices have a direct relation in as far as promoting the growth or demise of business, particularly foreign investment in any country.
The MDC Renewal Team described the post GNU period as the “new failure”; a period characterized by incompetence, corruption, deflation, dishonesty and stagnant growth of the economy.
“From a high point of 12% growth rate in 2011, 10.7% in 2012, the GDP growth rate has plummeted to growth levels below 4% in both 2013 and 2014”.
“In 2015, no amount of spin will hide the fact that the growth rate under the new failure will be below 1%.The economy is clearly sinking; it is clearly in recession”, said MDC Renewal Team Secretary General.
Biti alluded to the fact that net revenue flows in the country had collapsed and the country had recorded a budget deficit of 30% in 2014; with the deficit being hidden through accumulated domestic debt in Treasury Bills which totaled a US$1 billion in 2014.
Investment into Zimbabwean business sector has mainly being hampered by the indigenization policies, which require all foreign investment to own a maximum of 49% shares of the business they are engaged in.
In 2014 alone Zimbabwe recorded imports of US$5.8 billion against exports of US$2.8 billion, this clearly indicates anomalies in the economy and this has directly impacted on the prevailing economic situation in the country.
Statistics released by Zimbabwe National Statistics Agency (Zimstat) shows that the deficit stood at $2.9 billion between January and October in 2014; with the trade deficit standing at $3 billion last year.
The statistics from show that the Zimbabwean economy continued to be over-reliant on imports and this has negatively impacted on the performance of the economy.
Investing in local collapsing industry would go a long way in breathing life into the local industry and that would open up doors for local employment creation and overturn the balance of trade.