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
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
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
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
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