Nobody expected more than a status quo budget from Zimbabwe finance minister Patrick Chinamasa when he presented his plans for 2015 this week. With revenue declining and the economy expected to flatline to growth of 3.2 per cent in 2015 after 3.1 per cent this year, the minister had little room to manoeuvre.
In 2015 both revenue and spending are projected at 28 per cent of GDP, virtually unchanged from the current year, tax changes are minor and the pattern of state spending remains skewed unsustainably in favour of public service wages. Although the government was committed to reducing its wage bill from 81 per cent of total spending to around 60 per cent by 2014, Chinamasa says this is not an option and the wage bill problem will only be resolved “in the medium to long term”. Read more
As the world’s least industrialised region with a youthful and fast-growing workforce, African policymakers have for decades put industrialization at the top of their development agendas. To date, however, industrialisation policies have failed as the share of manufacturing industry in sub-Saharan GDP has declined over the past 35 years to 10 per cent from 16.5 per cent in 1980.
In two of the few countries that did industrialise rapidly – South Africa and Zimbabwe – manufacturing’s share in GDP has halved from earlier peaks in the 1990s so that today both are striving to reverse this “premature de-industrialisation.” Zimbabwe, though, is hardly typical. Read more
Zimbabwe’s proposed sovereign wealth fund – gazetted in Harare last week – is unlikely to have a material impact on private investment. But, if well-managed, it could do wonders for the country’s bloated public sector. A draft parliamentary bill proposes that a maximum of 25 per cent of mining royalties should be paid into the fund to be managed by the Reserve Bank of Zimbabwe. The SWF will “support fiscal or macroeconomic stabilization” and the achievement of the government’s long-term development objectives. Read more
Zimbabwe this week started consultations on proposed new mining policies aimed at increasing the state’s role in the industry in everything from environmental management to marketing.
The move echoes the controversial indigenisation and empowerment law, requiring companies to divest 51 percent of their shares to indigenous (black) investors. The approach is different – with officials intending transparent in contrast to the secretive methods of the political radicals who pushed through indigenisation. But there is still much to worry the mining industry. Read more
On its own, the overwhelming “Yes” vote in Zimbabwe’s referendum on a new constitution means little.
Indeed, it is no more than the first act of a drama that will unfold over the next few months as the country moves towards presidential and parliamentary elections that will determine whether the economy maintains its recovery momentum or slides back into political-driven stagnation. Read more
This week’s announcement that Zimbabwe will no longer evict owners from properties covered by international investment protection agreements has been derided as “locking the stable door after the horse has bolted” by John Worsley-Worswick, who heads Justice for Agriculture (JAG), an activist group. He has little faith in the pledge by Herbert Murewa, lands minister, to honour the terms of Bilateral Investment Promotion and Protection Agreements (BIPPAs) that Harare has signed with foreign governments. Read more
Ever since the Zimbabwe government published its plans to localise majority ownership of the country’s mines, mixed messages have dominated the debate over investment and growth.
Last week was no different, with the finance minster, Tendai Biti, and miner Amplats making positive noises about investment which seem rather optimistic, to put it mildly. Read more
For years Zimbabwe politicians have been prone to extravagant forecasts of the country’s economic prospects, embellishing projections with references to vast unexploited mineral wealth, limitless agricultural potential and dazzling opportunities in tourism and manufacturing.
But on Thursday Finance Minister Tendai Biti injected a note of stark realism into his 2013 budget. He downgraded GDP growth estimates for 2012 from 9.4 per cent in his budget a year ago and 5.6 per cent in mid-year to just 4.4 per cent. Read more
After months of soul-searching by both borrower and lenders, Zimbabwe’s Treasury bill market re-opened last week.
It’s a small start – less than $10m – but it’s a significant moment. What does it mean for the country’s finances? Read more
Since dollarisation in 2009, policymakers in Zimbabwe have failed to solve the problems created by weak banks in a bankrupt econokmy with an overcrowded financial sector. Policy – driven by politicians not technocrats – has been decidedly populist.
It is familiar bank-bashing (over excessive charges, punitive interest rates and a reluctance to lend to SMEs) and politicians demanding rescue packages for banks that get into trouble. Four banks including the country’s biggest have turned to the government for help in the last two years. Now there’s a new plan to set up a fund for bad loans with a Dubai investment company’s help. Read more
The EU’s proposal to suspend its targeted personal sanctions against 112 Zimbabweans is much ado about very little. The sanctions, imposed a decade ago, have had no discernible impact either on the economy or on Zimbabwe’s politics.
The latest move from Brussels is another chapter in the long history of the failure of sanctions. Read more
The Zimbabwe government’s latest threat to foreign business – this time foreign banks – is seen in Harare as bluster rather than substance. The instruction by Saviour Kasukuwere, minister for indigenisation (pictured), to a handful of foreign-owned banks to reduce their ownership to a maximum of 49 per cent by July 2013 has more to do with his political party’s dismal electoral prospects than serious restructuring of Zimbabwe’s financial system. Read more
Last week Navi Pillay, UN High Commissioner for Human Rights, said sanctions on Zimbabwe applied by some Western countries were having “a negative impact on the economy at large, with quite possibly serious ramifications for the country’s poorest and most vulnerable populations”. Her claim does not bear examination. Read more
Mugabe-watching has become as much of an art form as Kreminology used to be. When a little-known website reported that the 88-year-old Zimbabwe president was near death in a Singapore hospital, first the Twittersphere then international media went into overdrive, boosting the flagging spirits of equity investors in Zimbabwe’s stagnant stock exchange and raising hopes in the mining industry that the nightmare of indigenization – majority ownership by Zimbabweans – might soon be dispelled.
It was not to be. On April 12 Mugabe arrived back in Harare “fit as a fiddle” – and the Zimbabwe Mail apologised and began looking for a replacement news editor. Nevertheless, the episode raises again the issue of just how – as well as when – Zimbabwe will make the transition to a post-Mugabe era. Read more
For two years Robert Mugabe’s Zanu-PF has been ratcheting up the pressure on foreign-owned firms demanding that they dispose of a minimum of 51 per cent of their shares to indigenous Zimbabweans. This week’s agreement (in principle) for the localisation of majority ownership of Zimbabwe’s largest exporter Zimplats has the potential to be a gamechanger, economically and politically.
With elections due in the next 18 months, the Zanu-PF will be keen to push on with the programme. So which companies are next in line? Read more
Given the severe political, as well as economic, constraints within which he is forced to operate, Tendai Biti, Zimbabwe’s finance minister (pictured), did well to present a workmanlike, balanced 2012 budget to parliament last week.
Trying to secure consensus in a coalition administration in continuous electioneering mode is a near-impossible task, especially when it comes to the murky area of revenues from the country’s controversial Marange diamond fields. Read more
In a country that needs foreign capital not to grow but to survive, Zimbabwe’s indigenisation law defies understanding. Although the recent sale by the state of a 54 per cent stake in the Zimbabwe Iron and Steel Company (Zisco) to a Mauritian-based Indian company, Essar Africa, shows that some foreign investors – especially from Asia – are more equal than others, mining companies, regardless of size, have since been singled out for special treatment.
They have been given until the end of September not just to submit “empowerment” proposals but to actually give up majority ownership, though the deadline will surely pass as negotiations continue. Read more
Four new economic programmes in less than 30 months in office might suggest that Zimbabwe’s fragile coalition government is bursting with new ideas.
But there is little fresh thinking in new industry policy plans – a decision to “pick winners” in particular harks back to protectionism, while the medium-term development plan repeats some of the World Bank’s structural adjustment mantra of 20 years ago. Read more