Political and Economic Chaos

Whenever I sit down to write this weekly letter, I am faced with a dilemma as to what I might say about the immediate situation in the country. I have often described watching the situation in Zimbabwe as like being an observer of a medieval clash between two armies in Europe a thousand years ago. The opposing forces gather on the hills overlooking an open valley and then move down to clash on the valley floor.

Observers on the hills cannot make out who is who or what is actually happening and what the outcome will be, but gradually it becomes apparent that one side is winning and in the end the victors hold the field while the defeated limp off the battlefield leaving their dead and wounded to the mercy of the victors.

In the past three months watchers of the political scene here would have felt very much the same way about the conflicts raging in the Zanu PF Party. Even now at this late stage it is difficult to see just who is “winning”. It’s quite clear who is “losing” and the body count is rising by the hour, but there are so many elements at play that we might have to wait for a while before we can truly judge just who has come out on top.

For those of us who have the privilege of not being combatants and at the same time holding a good vantage point from which to observe the battle, one thing is sure, the aftermath is going to be a sorry state of affairs. The “victors” are bloodied and weary, the “defeated” are stunned and shocked, both by the speed of their defeat and the brutality with which it was carried out. No quarter was given and no measures or weapons held back.

But the one thing that everyone needs to understand is that this struggle on the political playing field is doing nothing to solve our immediate problems and they are many. In fact, this battle is merely a diversion and has forced the key decision makers to take their eyes off the real issues confronting us as a nation. The battle is absorbing resources and attention that is urgently needed to tackle our immediate problems; it is deepening the crisis we all face.

The first aspect of this crisis is leadership. It is now clear to all that our present leadership in the form of the State President and his close coterie of loyalists is no longer able to lead the country or take the decisions required to get us out of the hole we are in. At the same time, the specter of opposition leaders of intelligence and capacity, squabbling among themselves and forming alliances gives us little hope that a viable alternative might be forged from the opposition ranks.

Looking at the survivors from the battle field in front of us right now also gives us little comfort – just who is left standing? What is their record in government and as leaders, is there anyone who can inspire the survivors and spectators to go back into the nation and find the strength and the inspiration to get things moving on the many fronts that challenge us today?

On Thursday the new Central Committee of Zanu PF meets to endorse the victors and crown the new Prince. The King and his Queen are already in place, crowned at the Congress last week. In MDC we meet in the form of our new National Executive (the equivalent of the Zanu PF Politburo) on Friday. Our new leadership is in place but we will be recognizing those who take their places in the Executive after our own Congress in October.

Both leadership groups have seen dramatic changes and many of the leaders who survived the battles in their Parties will show the wounds of battle. It will be some time before they settle down and take a grip on events within their Party and then in the State at large. There is no time to waste and the Zanu PF leadership in particular are going to have to face up to the challenges with hardly any time to recover from the vicious fight they have just survived.

On the economic front the challenges are immediate and substantial. The economy is actually contracting, revenues to the State have fallen 10 per cent short of budget while expenditure has exceeded budget by 15 per cent creating a budget deficit of 27 per cent of revenue. The State is in the process of cleaning up after Gideon Gono at the Reserve Bank and is taking over $1,6 billion in new debt and now has taken on another billion in debt in 2014 alone.

The 2015 budget reveals the full extent of the problems – even though they have over estimated revenues, they still have a budget deficit planned of half a billion dollars (they had planned a small surplus in 2014) which is likely to balloon to another billion dollars in practice. Despite this, allocations to nearly all line Ministries are totally inadequate for their needs. Fiscal constraints are so serious that it is possible that the State will not be able to meet even the most critical of its needs in 2015.

This means that the State has taken on an additional $3,5 billion in debt and in addition is considering taking over $800 million of bad debt in the books of the commercial Banks to try and prevent any more bank failures. $4,3 billion in new debt in two years – half the value of national debt accumulated over the 35 years of Independence and five times the debt taken over from the Rhodesians in 1980 after 84 years of settler administration. The reality of “you eat what you kill” has never been starker; in previous years they simply printed money and we all paid the price. Now, because of dollarization the State has to face the music on their own without any artificial solutions.

In political terms this means that the new team at the helm has no choice but to go back to the International Community for help and there are signs that this is already underway. The International Community will extract a price and this time I see no way that the leadership of Zanu PF can avoid the real issues. These are:

- Removal of the obstacles to foreign direct investment;
- Restoration of Property Rights and respect for the rule of Law;
- Full implementation of the new Constitution both in spirit and in law; and
- Implementation of all the reforms required to provide for a free and fair election in 2018.

If they do follow this prescription, I believe that they will secure a substantial response from the International Community and be rewarded with a swift turn-around of the economy which has the capacity to grow at double digit figures for years to come. The challenge then for both Zanu PF and the Opposition Parties is to rebuild their leadership and structures so damaged by the recent battles, so that the scene is set for a real contest for State power in 2018.

To those who are “cleaning house” in Zanu PF we would also say, you have a long way to go before we are prepared and ready to help chart the way forward. You are going to need all our help to overcome our immediate difficulties and then get Zimbabwe back on the road to real growth and democracy.

Eddie Cross
Harare 10th December 2014