National Paralysis

In a few days it will be 12 months since Zanu PF regained total control of the State in Zimbabwe. They have to contend with a new Constitution - the one element in the GPA that they could not circumvent but clearly they have a strategy to deal with that problem by simply fudging its implementation and delaying the required legislative changes to our laws.

However the main outcome of the election has not been progress, recovery and growth. Instead our economy has voted 'no confidence' in the Zanu PF regime in very clear terms. The stock market was the first casualty - declining immediately by 30 per cent and this decline has continued with an 8 per cent decline so far this year. Then we saw cash and capital flight - the former out of the formal sector and the banks and retreating back into the informal sector, the latter out of the country and back to safer havens.

Since July 2013, 23 per cent of our commercial banks have either ceased to operate or have been placed in receivership with the total loss of depositor's funds. All other banks report high levels of non-performing loans and significant write downs of their loan portfolio's as well as very tight liquidity conditions. Hundreds of firms have taken the easy way out and gone into liquidation and many others are simply not paying their creditors or staff. Nearly all State enterprises are technically insolvent, including the Reserve Bank.

As a consequence, the rapid recovery in economic activity that characterized the four years under the control of the GNU, raising revenues to the State from US$280 million in 2008 to US$4 billion in 2012, has not only halted but has actually started to decline. The response of the government through its tax agencies has been to intensify collections and to strip many State controlled funds of any accumulated surpluses. They have also borrowed funds from anyone who would make such funds available. As a consequence it is rumored that they have accumulated nearly a billion dollars of new domestic debt. Whatever the size of the debt and to whom it is owed, it is unsustainable and will only exacerbate the economic problems of the regime this year.

In its international relations the situation has also deteriorated. We have possibly the worst possible candidate as Minister of Foreign Affairs that we could have had. In addition, after six months of trying to work out what had happened in 2013, nearly all significant foreign governments have concluded that the GPA/GNU was a failure, that if anything the humanitarian and political situation in Zimbabwe has deteriorated and that the prospects for reform and improved governance have deteriorated. They have scaled back their involvement and reduced aid flows and have focused their attentions on other regions with problems that are either more directly concerned with their own interests or constitute a real threat to global security and stability.

Then finally the Party has appointed a number of people to key positions in the new government who clearly have nothing to offer in terms of ideas or energy. Only the Minister of Tourism and Finance seem to have any sort of grip on their portfolios, the rest are the same old corrupt and incompetent characters who led the country to the economic and political crash in 2008. This is compounded by the fact that the man at the center of the whole mess, the State President, is far from well, increasingly frail and unable to handle his responsibilities.

In culinary terms, put all of the above into a bowl and blend with a big spoon and what have you got - national paralysis. The population is in full retreat back into the informal sector and survival mode. Hundreds are leaving the country for greener pastures (the majority illegally) and the State and all local authorities are close to becoming dysfunctional. We simply do not have the money to do anything more than pay a bloated Civil Service and armed forces their salaries and little more. In all institutions except those of central government, payment of salaries is a problem and it's only a matter of time before the same malaise infects central government itself.

As many of my friends have told me in the past, countries do not go bust; they just sag at the knees. We came close to going bust in 2008 and were rescued by the interventions of South Africa with the support of the G7 Group of major powers. This time we are sagging at the knees and the result is stagnation and a slow decline in economic activity. The State, already collecting an astonishing one third of GDP is desperately trying to get more out of the stones and in the process is strangling what remains of the economy.

So long as we do not start shooting each other, or infecting our neighbors with the many diseases we suffer from, we run the risk that we will be simply ignored with regional States pursuing a strategy of containment rather than engaging in any attempt to force some sort of sense into local heads. Zimbabweans will die in large numbers, but quietly and unrecorded - we have a death rate that is three times higher than it was before this crisis started in 1997, but so what? The TV cameras are pointed at other images that are more immediate and exciting. The death rates in Zimbabwe are genocidal is scope but have continued now for more than 15 years virtually without any international concern and attention.

Last week the President of the MDC called for a resumption of the national dialogue that had actually brought about the GPA/GNU in 2008. The response of Zanu PF was to say that they were willing to do so but we must stop making allegations about how they won the 2013 elections. The problem is that they are asking for us to condone what they did in 2013 and to help them correct the damage and restore confidence.

We can turn the economy in Zimbabwe around in short order if we do the right things and put our best people into positions where they can take control and start putting Zimbabwe on a path to growth. In fact it's my own view that Zimbabwe could become the fastest growing economy in Africa by the end of next year. We have all the right ingredients, but it's not going to happen with the present crew in charge.

Eddie Cross
Harare, 10th July 2014