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 is suffering from capital flight, a liquidity crunch, regular power outages, falling commodity prices and other manifestations of an economic crisis.
But beyond these well-documented woes, there are several “mysteries” that throw up searching governance questions for the regime of Robert Mugabe, the 90-year-old president. Read more
The bad old days of hyperinflation
In a week where currency after currency in the emerging markets have been battered, it’s nice to keep your options open. In which case, Zimbabwe seems to have the right idea. Its citizens can now pick any of nine currencies to use.
As of Wednesday, four new currencies are legal tender in the southern African state: the Australian dollar, the Chinese yuan, the Indian rupee and the Japanese yen. 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
It’s a 15,000-word document setting out how the government will “prioritise its programmes… and address the country’s socio-economic challenges.” It’s one of the few substantial documents that analysts can get hold of to look for insights into an opaque administration’s intentions.
No, this is not China. It’s Zimbabwe, with this week’s publication of a document titled Zim Asset (Agenda for Sustainable Socio-Economic Transformation). So Robert Mugabe has also set out his stall for Zimbabwe’s next stage. What’s in it? Read more
Zimbabwe is increasingly pinning its hopes on its mining industry to beef up the government coffers. The government is keen to tap into the sector’s huge potential – it holds the second largest platinum reserves globally and its diamond fields are also reportedly ranked among the top five diamond reserves in the world.
But mining needs support to get over the constraints of high production costs, excessive fees, and falling commodity prices. So the government is planning to issue it’s first bond aimed at financing the mining sector. Will it be able to convince investors to participate? Read more
Research by Harvard’s Ricardo Hausmann has found that Mexico, Zimbabwe and Egypt are well-positioned to grow. Qatar and Brazil are less well-placed, while China risks recession. In part two of a discussion with John Authers, he explains his unexpected predictions.
At least someone is selling
In just under two weeks the Confederation of Zimbabwe Industries (CZI) is due to hold its annual congress. The main focus will be restoring growth at a time when factories and shops are fighting to stay open. Zimbabwe’s industry is still in a perilous state, but following Robert Mugabe’s election victory in July, what can be done? Read more
The Zimbabwe Industrials Index fell 11.1 per cent on Monday, wiping out all the gains made since mid-May. Retailers were some of the hardest hit.
Despite a coalition government achieving some stability since 2009, the poor state of the economy is a pressing issue for voters and investors as Zimbabweans await the results of their first election since a disputed ballot five years ago, says the FT’s Southern Africa bureau chief Andrew England.
As Zimbabweans prepare to vote in Wednesday’s fiercely contested election, their neighbours in South Africa will be watching closely. Its outcome will set the scene for the development of trade and investment between the two countries. Read more
A dash of good news from Harare, Zimbabwe’s capital city: construction work on a Hilton hotel is due to begin in October. With a cloud of political uncertainty hanging over the country and in the midst of a messy “indigenisation” of foreign businesses, it’s a pretty bold move.
The Hilton will need some contingency plans, given the chronic water shortages and power cuts that plague the country. It may find it harder to deal with low occupancy rates across Zimbabwe. Read more
Investing in Zimbabwe is not for the faint-hearted. But its stock exchange has been booming of late. To maintain the momentum, management at the Zimbabwe Stock Exchange is planning to sell shares in the organisation this year to raise funds for modernisation.
Tafadzwa Chinamo, chief executive of the Zimbabwean Securities Exchange Commission said in an interview with Bloomberg that an initial public offering would take place before the end of the year, with a likely valuation of around $15-20m. 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
Investors appear to be getting pretty jittery about placing their money in projects in Zimbabwe, as official foreign direct investment figures from a government agency indicate.
After the country’s recent economic turnaround (post-dollarisation), investors are being turned off by the uncertain political climate, and the small matter of not knowing if they will be stripped of half a business. Read more
Zimbabwean president Robert Mugabe’s plan to hold a general election by June 29, when the current parliament will be dissolved, looks increasingly like a pipe dream. Do the maths and you’ll see that it is impossible for the country to hold a vote before the end of July at the earliest, the country’s finance minister Tendai Biti said.
“It’s a processing issue which will determine the date of the election,” he told beyondbrics from the sidelines of a talk at Chatham House, the think tank. “It is not possible to have elections before at least the end of July”. 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
Zimbabwe’s beleaguered indigenisation policy has been dealt several big blows in the last few days. Alleged corruption, arguments over deal fees, calls for a parliamentary probe – and to top it all, even president Robert Mugabe criticising the process.
The controversial black empowerment policy, which forces foreign firms to divest 51 per cent of equity to locals, is one of Mugabe and his party, Zanu-PF’s key strategies. But is it falling apart? Read more
It’s been a roller coaster week for platinum prices, which climbed in the middle of the week before sliding back at the close. Supply disruption in Africa is a dominant factor, analysts say, something that is set to continue driving prices. Read more