On May 1 — Labour Day — one of President Robert Mugabe’s top officials took to Twitter to offer a bleak assessment for Zimbabwe’s economy.
In unusually frank comments, Jonathan Moyo, information minister, tweeted: “This May Day our triple challenge is we’ve workers without work, we’ve lost the sense of labour value & we lack a strategy to create wealth!”
Mr Mugabe’s government typically talks up Zimbabwe’s economy. But with the country battered by political instability, drought, policy uncertainty and collapsing industries, the signs look increasingly dire. Some warn the southern African nation could slip back into recession for the first time since 2008.
John Robertson, an independent economist, predicts gross domestic product could contract 5 per cent this year. “All the main indicators suggest shrinkage of the economy,” he says, citing a poor harvest, falling manufacturing output, liquidity shortage and job losses from business closures.
The International Monetary Fund forecasts annual growth of 2.8 per cent, down from an estimated 3.2 per cent in 2014. But it also warned growth continued to slow “amid rising competitive pressures, insufficient external inflows …and declining prices for mineral exports”.
The IMF has called for reform, including a commitment to rein in the public sector wage bill — set to be almost 60 per cent of government annual revenues.
But that looks hopeful. Patrick Chinamasa, finance minister, was forced into a humiliating U-turn last month after Mr Mugabe publicly savaged his plan to suspend civil service bonus payment as an economic measure.
The 91-year-old autocrat, who has ruled Zimbabwe since independence from Britain in 1980, described the proposal as “disgusting”.
The rise of government wages reflects the increasing role of the public sector in providing jobs as the private sector has shrunk since 2000. That was the year Mr Mugabe launched his controversial land reform programme, which saw the seizure of white-owned farms and triggered the collapse of the economy.
Zimbabwe’s manufacturing industry, which once employed more than 200,000 people, now accounts for 93,000 jobs. Some 4,600 businesses have closed in the past three years, according to the central bank.
Mr Robertson says they were unable to compete with cheap imports from other countries. He says of Zimbabwe: “Here, efficiency is low due to power cuts and the inability to modernise manufacturing methods, and costs are high because wages are out of line with productivity levels.”
Outside agriculture, the same number of people — about 785,000 — are employed in Zimbabwe’s formal economy as in the mid-1980s, despite the population more than doubling since then to 14m. The percentage of Zimbabweans employed in the public sector has doubled to 40 per cent since the 1990s.
“How ironic …[to] meet to discuss industrialisation in a country experiencing the opposite,” Japhet Moyo, secretary-general of the Zimbabwe Congress of Trade Unions, said last month as southern African government officials met at a summit in Harare.
The worry for Zimbabweans is that there are no signs that the decline will be stemmed.
Mr Mugabe and his ruling Zanu-PF party have tightened their grip on power as the country’s opposition has become weak and fractured. Political uncertainty also looms large over Zimbabwe as the nonagenarian president has failed to groom any obvious successor.
Late last year, Mr Mugabe was re-elected unopposed to lead Zanu-PF for another five years, while his wife Grace took up the post as head of the ruling party’s women’s league, cementing her status in the party’s hierarchy.
Wary foreign investors also face policy uncertainty after years of rhetoric about the need for foreign-owned businesses in Zimbabwe — from manufacturers to banks and mining companies — to be at least 51 per cent owned by black Zimbabweans.
The anxiety was exacerbated by an announcement in March of Harare’s plans to nationalise the diamond mining industry, which would force producing companies such as Rio Tinto’s Murowa Diamonds to consolidate into a single company that would be 50 per cent state-owned.
Such policy making occurs when a government “does not want a reform agenda and plays to the masses,” says Godfrey Kanyenze, a labour market consultant. “We are witnessing a crisis of political expediency versus promoting the national interest.”
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