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Economists: Only New Leadership Can Revive Zimbabwe's Collapsed Economy


Zimbabwe's economy has been in crisis for nearly 10 years, but as election day approaches, its collapse is gathering pace, and no one is sure where it is heading. Peta Thornycroft reports for VOA that economists, industrialists and political analysts say the economy can only recover if there is new political leadership.

Zimbabwe used to be a breadbasket of Africa and was the second most industrialized nation on the continent. Now it depends on food aid and most of its industries have closed or are working only one or two days a week, a decline many analysts attribute to the failed leadership of President Robert Mugabe and his chaotic land reform program.

Mr. Mugabe blames Western nations, particularly Britain and the United States, for his country's economic woes.

Economist John Robertson says the economy is so tattered, it will require new political leadership of a special caliber to launch a recovery process.

"They will have to do some amazingly difficult things, because most of ZANU-PF policies over the last decade or more have been policies designed to avoid pain, avoid the difficulties they should have accepted front on," he said. "A new leader would have to fix those very quickly and [that] would be very much more painful than a politician trying to win popular support."

Robertson is alluding to the coming election in which two candidates are challenging Mr. Mugabe to become the new president of Zimbabwe.

Simba Makoni, who was finance minister during the start of the land reform program, announced his candidacy just last month. He had to quit his job, or was forced to, when he advised his then boss, Robert Mugabe, to devalue the Zimbabwe dollar in 2002.

The other candidate is Morgan Tsvangirai, who started out as a unionist and led the recovery of the trade union movement in Zimbabwe before he became the founding present of the opposition Movement for Democratic Change (MDC) in 2000.

Both men devote a lot of campaign time telling people how the economy needs to be reformed. Economist Robertson says if either man wins the election he will be faced with a daunting task to inject life back into the economy.

At present it takes about 30 million Zimbabwe dollars to buy $1 U.S. on the black market, which is the only way to acquire foreign currency these days. Robertson says Zimbabwe will not recover without international assistance, in particular to stabilize the Zimbabwe dollar, which loses value every day.

"We need to be treated as a disaster zone in desperate need of assistance much as if we had suffered an earthquake or a flood," he explained. "If the country tried to recover with its own resources, it would take far, far too long, so the assistance we would need would be mainly to recapitalize the country to give people the resources needed to hit the ground running in every industry, especially in agriculture."

Robertson suggests that a new leader will have to respond to market forces and drastically cut the size of the civil service. He also notes that companies or individuals in debt at the time of a transition to a new political dispensation would struggle to survive a stable Zimbabwe dollar and real interest rates.

A few people have made fortunes out of Zimbabwe's political and economic chaos. With the plummeting value of the currency, the few who have cash invest it in the Zimbabwe Stock Exchange, the only viable option to preserve or grow its value. The economically perverse consequence of this is that in 2007 the ZSE was the best performing stock market in the world.

Stock exchange chief executive Emmanuel Munyukwi laments the ever deepening crisis and says most companies still operating are only trying to survive until there is a new political dispensation.

"These companies are probably operating at less than 20 percent capacity, they have got assets which are real, the assets are there, so should circumstances change here the upside potential is huge," he noted.

Munyukwi says the banks, for example, no longer operate as they did when Zimbabwe's economy was sound. He says important traditional roles of private banks such as lending to investors and supporting agriculture have been taken over by the central bank. He says commercial banks are now more like post office banks, dealing only with individuals' accounts.

Munyukwi says he is an optimist and believes that there could be a recovery reasonably fast if there is a new political leadership.

"When you look what's happening on the ground, most of our problems are political," he said. "Once the political situation is resolved, it cascades down. The executives running the companies in Zimbabwe are going through a very difficult time, even producing in some instances good results under very, very trying circumstances. Now if the playing field is level - this is the potential I am talking about - people will start making money."

Both Makoni and Tsvngirai have said if they won the presidential election they would restore the ailing banking sector and return the central bank to its traditional role.

However, President Mugabe is campaigning hard. He has apologized to people for their suffering mainly blaming the west for their plight, but saying that ZANU-PF has also made mistakes. He is determined to serve at least another five years, and many Zimbabweans wonder what will happen to the economy if he retains power.

Political analyst Brian Raftopoulos says if he does the West will not recognize the outcome of the election because, he says, already there are strong indications that the polls will be neither free nor fair. Raftopoulos predicts the economy will shrink further and suffering will escalate.

"Well if Mugabe wins it is simple, conditions will continue to deteriorate," he said. "This would not be an election that is widely recognized, there will be no recovery, the Mugabe regime will be further isolated. The economy will continue to deteriorate, with Mugabe and his regime having no policy to bring Zimbabwe out of the current crisis, and therefore, all-round the conditions will get worse."

At month's end Zimbabweans will vote for the first time in four simultaneous elections - for the president, legislators, senators and, for local government representatives. Many are hoping that the election will indeed herald a new economic beginning in their country.