Economy

Economic mismanagement and corruption are the real sanctions on Zim

Struggling to tame corruption: President Emerson Mnangagwa.

President Emmerson Mnangagwa’s address to the United Nations General Assembly last week blaming sanctions for the country’s economic ills fails to take into account his administration’s mismanagement of the economy and failure to root out corruption, both of which have contributed to the nation’s impoverishment.

Despite rampant corruption that is deep-rooted across institutions and Zimbabwe’s fiscal indiscipline, Mnangagwa told world leaders during a virtual United Nations General Assembly annual meeting that sanctions worsened his country’s economic situation amid the eff ects of the Covid-19 pandemic on global economies and climate change.

The fiscal indiscipline reached a point where 98 per cent of the cash budget was, for successive years, gobbled by recurrent expenditure in the form of salaries and benefits for civil servants while the productive sectors and infrastructural development suffered.

“Like other nations in the region, we are facing humanitarian challenges, which, in our case, have been worsened by illegal sanctions, the negative impact of climate change and compounded by the outbreak of the Covid-19 pandemic,” Mnangagwa said, adding multilateralism is under increasing threat from the blind pursuit of narrow interest.

“We must, therefore, strengthen international amity and goodwill as well as uphold mutual respect and observe the sovereign equality of states.”

For decades, the Zanu PF government, under the late former president Robert Mugabe, put the blame squarely on sanctions for the country’s economic collapse. There is no doubt that the sanctions imposed by the United States, through the Zimbabwe Democracy and Economic Recovery Act in 2001 that restricts financial transactions between the southern African country and financial institutions associated with the US, have had a detrimental effect on the country’s battered economy.

However, it would be pretentious to totally blame the country’s economic malaise on sanctions. De-industrialisation has been among Zimbabwe’s major economic problems largely as a result of a hurried and chaotic land reform programme in 2000 that displaced thousands of productive commercial farmers and deprived the manufacturing sector of critical raw materials, eventually leading to its demise.

Companies failed to retool and import raw materials, eventually shutting down with thousands losing their jobs. According to a Confederation of Zimbabwe Industries manufacturing sector survey, industry capacity utilisation fell 11,8 per cent in 2019 to 36,4 per cent due to power shortages, inflation and foreign currency constraints.

The mining and agriculture sectors have not been spared by the erratic power supplies, forcing big players such as Zimplats, Mimosa, Zimbabwe Consolidated Diamond Company and Caledonia to pursue longterm solar solutions which are cheaper than diesel-powered generators.

Analysts say Mnangagwa’s address was devoid of truth as it conveniently ignored deep-rooted corruption that has cost taxpayers billions while running down critical public entities. Political analyst Rashweat Mukundu said while there are notable disruptions to the economy as a result of Covid-19 and climate change, lack of fi scal discipline and bad governance remain the country’s source of problems.

“The large part of the crisis in our economy is man-made in the sense that despite government’s statements in the public that they will cut back on public spending, indications from the public accounts committee in parliament clearly show that the government has maintained its appetite for unbudgeted expenditure,” he said.

Apart from this, Mukundu said, the Zimbabwean economic crisis is a result of economic policy inconsistencies over the years.

“Even if we trace to the end of 2017, we have had so much of pronouncements of the monetary and fiscal policy some of which is contradictory,” he said, adding the government has not created a conducive environment for investment.

“If you look at the land issue, there are still challenges with land tenure and continued farm invasions.”

Mukundu also argued Zimbabwe’s international image has continued to receive serious battering as a result of what he termed as “repression” by the Zimbabwean government.

Mukundu said a combination of these things, plus the effects of the Covid-19 pandemic and climate change have contributed to the economic crisis facing the country. He suggested several remedies to resolve the crisis, including building good relations with key political and social players in this country.

“Secondly, the government should be more positive with its relations with the international community and be more consistent in terms of economic policy. Government should reduce spending on non-productive sectors and this could, to some extent, help alleviate the crisis that we are facing,” Mukundu added.

Economist and former economic planning minister Tapiwa Mashakada also pointed to corruption and bad governance as the reasons why Zimbabwe’s economy is in trouble. Zimbabwe is ranked the 158th least corrupt country out of 180 in 2019, according to Transparency International. This poor performance, coupled with bad scores on the ease of doing business indices, has scared away investors.

“Sanctions too have hit the economy and so has corruption and a clueless government,” Mashakada said, adding Mnangagwa did not exhaust all the factors aff ecting economic growth and development in Zimbabwe.

He said Zimbabwe’s economy was to a lesser extent afflicted by exogenous factors such as climatic shocks, the Covid-19 pandemic and cyclical shocks such as macro-economic variability caused by policy missteps. – The Zimbabwe Independent.

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